Biden’s energy funds fall behind schedule over China scrutiny

US Energy Secretary Jennifer Granholm knows time is not on her side . President Joe Biden has 18 months left until the next inauguration day, with no guarantees he can hold onto the White House and continue pushing his agenda to fight climate change with massive subsidies for electric vehicles. The Department of Energy has to hurry if it wants to allocate the tens of billions in grants and loans made available through the Bipartisan Infrastructure Law and the Inflation Reduction Act. In some respects, the Energy Department has slipped behind schedule. When it announced the first $2.8 billion in grants funded by the infrastructure law last October, the goal was to disburse the money to 20 grantees by April. It’s now mid July, and just four companies have received the money. There are plenty of reasons the agency isn’t doling out billions of taxpayer dollars to private companies in hasty fashion. For one, political scrutiny has intensified, with Republicans accusing the Energy Department of funding technology that benefits China. The trouble is, decoupling is a relatively new phenomenon in Washington. Not long ago, American entrepreneurs seeking fortunes in China — at a time when the US lacked a meaningful EV market — would have been encouraged. Now, it’s cause for concern. Many grant requirements guard against risks the agency’s critics are concerned about, including restrictions on hiring of foreign nationals, provisions to buy American supplies and equipment where possible, and stipulations on cybersecurity to guard against intellectual property theft. But that same criteria is making it difficult for the department to stay on schedule, which speaks to the scale of the challenges the agency is trying to take on. “The US government hasn’t given out this level of taxpayer money since World War II,” said Todd Malan, head of external affairs at Talon Metals Corp., which is waiting on about $115 million to help fund a nickel-processing plant in North Dakota. “It makes sense they’re cutting their teeth first so they can go faster in the future.” At least one project on the Energy Department’s list seems to have been eliminated over a company’s China exposure. In May, the agency nixed a $200 million grant that would have helped Microvast Holdings Inc. build a battery separator plant in Kentucky with General Motors. The Texas-based firm, which raised more than $800 million by merging with a blank-check company in 2021, said the DOE’s decision will delay but not deter efforts to bring its separator technology to market. “I’m disappointed we didn’t receive the grant,” Chief Executive Officer Yang Wu, a Chinese-born American citizen, said in a statement last month, weeks after canceling plans for the $504 million Kentucky plant. “Microvast is an American company deeply committed to doing business in America.” Microvast states in regulatory filings that a “substantial” portion of its operations are located in China, that it receives subsidies from the government, and that its operations are subject to extensive regulation by the government. COO Shane Smith told Bloomberg in February that Microvast’s planned US projects would shift the balance of its assets to the US, and that the intellectual property the Energy Department initially planned to fund would be cordoned off from China. But in 2017, the company licensed cathode technology from the Energy Department-owned Argonne National Laboratory to use in a product aimed at carmakers and consumer-electronics companies, according to an April 2022 prospectus . In the same filing, the company warned that it may not be able to protect IP rights in China. A Microvast spokesperson didn’t respond to requests for comment. Amprius Technologies Inc., another blank-check battery upstart, was slated for a $50 million Energy Department grant to make silicon anode material. CEO Kang Sun said the company chose to drop out of the grant process because the constraints on carving out China were too onerous. Amprius also recently spun off two Chinese subsidiaries, though Sun still sits on the board of both, according to the company’s website . “There is no one who can beat China in terms of performance and cost in most of the equipment” for making batteries, Sun said in an interview. While he had positive things to say about the Energy Department’s grant program, he suggested it didn’t fit with the company’s “operational needs.” Amprius, which is targeting the electric aircraft market, plans to apply for other Energy Department money in the future, he said. Another variable factoring into the Energy Department’s progress is private market willingness to match government grants. This isn’t as straightforward as it was a couple years ago, with interest rates at the highest level in a decade and investors still licking their wounds from a boom and bust cycle for EV startups. While government backing will help companies’ cause, it may not be enough to convince the kind of investors the Energy Department needs to step up and fund a domestic EV supply chain. “The government is funding what’s available now, to get shovels in the ground now,” said Shay Natarajan, a partner at private equity firm Mobility Impact Partners. “But that is not the leapfrog, next-generation, differentiating tech that private capital wants to bet on.” — By Gabrielle Coppola with assistance from Ian King. (Bloomberg News)

Biden’s energy funds fall behind schedule over China scrutiny

The Energy Department has given grants to only four companies out of a planned 20

BHPH lenders increase performing loan sales as liquidity tightens

Chase Auto originations up 71% YoY

Related Posts

Porsche ABS deal reveals changes in luxury market (Under the Hood)

Pagaya auto run rate rises 10% to $2.2B

Tricolor’s frantic end was sparked by a phone call from JPMorgan

Chase Auto originations up 71% YoY

Stay Informed with Our Newsletters

The Roadmap Podcast

SPONSORED

Driving Innovation in Automotive Refunds: How Onbe and Allied Solutions Are Modernizing the Payment Experience

Navigating the Margin Squeeze: EVs, Tariffs & Pricing — A Q&A with Earnix

Enhancing credit approaches to boost conversion and dealer loyalty

Welcome Back!

Retrieve your password