Billion-dollar battery plant pauses construction amid electric vehicle
and tariff uncertainty
[June 07, 2025] By
JEFFREY COLLINS
COLUMBIA, S.C. (AP) — A Japanese company has halted construction on a
$1.6 billion factory in South Carolina to help make batteries for
electric BMWs, citing “policy and market uncertainty.”
While Automotive Energy Supply Corp. didn't specify what those problems
are, South Carolina's Republican governor said the company is dealing
with the potential loss of federal tax breaks for electric vehicle
buyers and incentives for EV businesses as well as tariff uncertainties
from President Donald Trump's administration.
“What we’re doing is urging caution — let things play out because all of
the these changes are taking place,” Gov. Henry McMaster said.
AESC announced the suspension in construction of its plant in Florence
on Thursday,
“Due to policy and market uncertainty, we are pausing construction at
our South Carolina facility at this time," the company's statement said.
AESC promised to restart construction, although it didn't say when, and
vowed to meet its commitment to hire 1,600 workers and invest $1.6
billion. The company said it has already invested $1 billion in the
Florence plant.
The battery maker based in Japan also has facilities in China, the
United Kingdom, France, Spain and Germany. In the U.S., AESC has a plant
in Tennessee and is building one in Kentucky. The statement didn't
mention any changes with other plants.
The South Carolina plant is supposed to sell battery cells to BMW, which
is building its own battery assembly site near its giant auto plant in
Greer. BMW said the construction pause by AESC doesn’t change its plans
to open its plant in 2026.
AESC has already rolled back its South Carolina plans. They announced a
second factory on the Florence site, but then said earlier this year
that their first plant should be able to handle BMW's demand. That
prompted South Carolina officials to withdraw $111 million in help they
planned to provide.
[to top of second column] |
AESC Group CEO Shoichi Matsumoto speaks at the "Topping Out"
structural completion milestone ceremony for the 1.6
million-square-foot AESC gigafactory being constructed in the
Kentucky Transpark in Bowling Green, Ky., on Thursday, Sept. 14,
2023. (Grace Ramey /Daily News via AP)
 The company is still getting $135
million in grants from the South Carolina Department of Commerce and
$121 million in bonds and the agency said a construction pause won't
prompt them to claw back that offer.
South Carolina is investing heavily in electric vehicles.
Volkswagen-owned Scout Motors plans to invest $2 billion and hire
4,000 people for a plant to build its new electric SUVs scheduled to
open in 2027.
The state has for decades made big bets on foreign manufacturers
like BMW, Michelin and Samsung that have paid off with an economic
boom this century, but there is uneasiness that Trump's flirtation
with high tariffs might stagger or even ruin those important
partnerships.
McMaster told people to relax as state and business leaders are
talking to Trump's administration and things will work out.
“I think the goal of the president and the administration is to have
robust economic growth and prosperity and there is no doubt there
has to be changes made in our international trade posture and
President Trump is addressing that,” McMaster told reporters
Thursday.
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