AESC Halts 16 Billion Dollar Battery Factory Construction in South Carolina Due to Policy Uncertainty

AESC, a Japanese company, has announced the suspension of construction on a 16 billion dollar battery factory in South Carolina. The factory was intended to supply batteries for BMW's electric vehicles. The company cited "policy and market uncertainty" as the reason for the halt in construction.

South Carolina's Republican governor, Henry McMaster, indicated that the company is facing risks related to potential cancellations of federal electric vehicle purchase tax credits and corporate incentives, as well as uncertainties surrounding the tariff policies of the Trump administration.

McMaster urged caution, stating, "We are urging caution — let things take their course, because all these changes are happening." AESC made the announcement on Thursday, stating that due to policy and market uncertainties, they are temporarily halting the construction of the South Carolina factory.

The company has pledged to resume construction at an unspecified time and reaffirmed its commitment to hiring 1,600 employees and investing 16 billion dollars. AESC has already invested 1 billion dollars in the Florence factory.

AESC, headquartered in Japan, operates factories in China, the United Kingdom, France, Spain, and Germany. In the United States, the company has a factory in Tennessee and is constructing another in Kentucky. The statement did not mention any changes to the plans for these other factories.

The South Carolina factory was planned to supply battery cells to BMW, which is building its own battery assembly plant near its large automobile factory in Greer. BMW stated that AESC's construction suspension will not affect its plan to open the factory by 2026.

AESC had previously adjusted its plans for South Carolina: the company announced plans to build a second factory in the Florence complex but later stated that the first factory would be sufficient to meet BMW's needs, leading South Carolina officials to withdraw the planned 111 million dollars in assistance.

The company will still receive 135 million dollars in grants and 121 million dollars in bonds from the South Carolina Department of Commerce, which stated that the construction suspension will not prompt a recall of funds.

South Carolina is heavily investing in the electric vehicle sector: Volkswagen's Scout Motors plans to invest over 4 billion dollars and hire 10,000 people to build a factory producing new electric SUVs, with the factory scheduled to open in 2027.

For decades, the state has seen significant investments from foreign manufacturers such as BMW, Michelin, and Samsung, and has benefited economically from these partnerships. However, there are concerns that Trump's inclination towards high tariffs could hinder or even disrupt these crucial relationships.

McMaster assured the public to remain calm, stating that the state government and business leaders are communicating with the Trump administration and that the issues will be resolved. "I believe the president and the government's goal is to achieve strong economic growth and prosperity, and there is no doubt that our international trade posture needs to change, and President Trump is addressing this issue," McMaster told reporters on Thursday.