Energy Dept. cancels $200M grant to battery maker after GOP criticism over alleged ties to China

The Biden administration has canceled plans to award a $200 million grant to a U.S. battery manufacturer amid criticism from Republican lawmakers over the company's alleged ties to China.

Texas-based Microvast was one of 20 companies to win preliminary grants totaling $2.8 billion to boost domestic manufacturing of batteries for electric vehicles. The company is building a battery plant in Tennessee and was in talks with the Energy Department for a $200 million grant funded through the 2021 infrastructure law.

A spokeswoman for Energy Secretary Jennifer Granholm confirmed Tuesday that negotiations with Microvast were canceled, but did not offer a specific reason.

The Energy Department said in a statement that it "maintains a rigorous review process prior to the release of any awarded funds, and it is not uncommon for entities selected to participate in award negotiations'' to ultimately be denied a federal grant.

“The department can confirm that it has elected to cancel negotiations and not to award Microvast funds from this competitive funding opportunity,'' spokeswoman Charisma Troiano said.

The company did not immediately return a request for comment.

Republicans and Democrats praised the department's decision.

“This is a win for taxpayers and American businesses,” House Science Committee Chairman Frank Lucas, R-Oklahoma said in a statement. “On no account should our tax dollars be funding a company with substantial ties to the Chinese Communist Party. These funds are intended to strengthen America’s battery production and supply chain, not to tighten China’s stranglehold on these supplies.''

Lucas and other Republicans said they were frustrated that it took more than six months for the Biden administration "to come to such an obvious conclusion.'' Lucas and other GOP lawmakers have repeatedly complained about what they call Microvast's links to the Chinese Communist Party.

New Jersey Rep. Frank Pallone, the top Democrat on the House Energy and Commerce Committee, said the decision to rescind the grant “shows that the DOE is taking its stewardship of taxpayer money very seriously.″

At a Senate Energy Committee hearing in February, Sen. John Barrasso, R-Wyo., questioned whether the planned grant to Microvast would benefit China. Barrasso cited a company filing with the Securities and Exchange Commission in which Microvast said it may not be able to protect its intellectual property rights in China.

China often requires foreign companies to partner with Chinese businesses in order to operate in the country.

In a May 1 letter to Granholm, Barrasso said Microvast's CEO had “bragged to Chinese media about Microvast’s strong ties to the People’s Republic of China.''

The 2021 infrastructure law “was ostensibly intended to develop robust domestic manufacturing bases and supply chains'' for electric vehicles and other clean energy, Barrasso said. “DOE’s distribution of $200 million in taxpayer funds to a company joined at the hip with China'' would be "demonstrably antithetical to the Bipartisan Infrastructure Law’s intent,'' he added.

Barrasso called the Microvast grant an example of “the Solyndra Syndrome,” a reference to an Obama-era program that disbursed more than $500 million in loan guarantees to the failed solar company Solyndra. He and other Republicans said both cases demonstrated poor vetting by Democratic administrations.

The loan program largely went dormant under President Donald Trump but has been revived by President Joe Biden. It is separate from infrastructure law funding that was conditionally awarded to Microvast and other companies.

Grants announced in October were intended to help U.S. companies extract and process lithium, graphite and other battery materials. The Biden administration is seeking to boost production and sales of electric vehicles as a key part of Biden’s strategy to slow climate change and build up U.S. manufacturing.

“This is critically important, because the future of vehicles is electric,″ Biden said at a White House event last year. The Energy Department grants — along with other spending approved in the 2022 climate law — are a bid “to make sure we’re back in the (battery production) game in a big way,″ Biden said.