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The Biden administration has defended giving a $200 million grant to a battery component company with ties to the Chinese government.
In October, the Department of Energy (DOE) awarded a grant to Microvast, a Texas-based manufacturer of battery technology for electric vehicles, as part of a $1 trillion infrastructure package signed by President Biden in November 2021. Microvast was one of only 20 US companies to receive a portion of the nearly $3 billion earmarked for a program designed to improve domestic battery manufacturing capacity.
However, 69% of Microvast’s revenue was generated in China, with only 3% coming from the US, according to its third-quarter financials filed with the Securities and Exchange Commission (SEC) last month. In the same filing, the company acknowledged that the Chinese government “exercises significant influence” over its business activities and “may intervene at any time and without notice.”
“Microvast is an American battery company,” a DOE spokesperson said in a statement to Fox News Digital. “Thanks to the bipartisan infrastructure bill, it no longer needs to look to China to set up its manufacturing facilities.” The president’s historic plan is helping to bring manufacturing back to the U.S.”
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“The DOE award to Microvast, along with significant matching funds from the company, will allow Microvast to build a separator manufacturing facility here at home,” the spokesperson added.
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But the company’s ties to China appear to run deeper than operating a factory in the country.
In 2006, Microvast incorporated in Stafford, Texas, and simultaneously incorporated Microvast Power Systems, a subsidiary, in Huzhou, China. Four years later, in 2010, Microvast began manufacturing lithium battery components in Huzhou, where its subsidiary is headquartered.
Microvast Power Systems also signed an agreement in December 2018 with the local government entity Huzhou Saiyuan to issue convertible bonds. As part of the arrangement, Microvast pledged its 12.39% stake in Microvast Power Systems to Huzhou Saiyuan to facilitate the issuance of convertible bonds.
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And in its recent SEC filing, the company repeatedly acknowledges the influence of the Chinese (PRC) government on its operations.
“The government of the People’s Republic of China may make, at any time and without prior notice, significant interventions and impacts on the way we conduct our business activities, which we may not be able to predict,” the company said.
“If the government of the PRC decides to significantly intervene, influence or establish new policies, regulations, rules or laws affecting our business, said significant intervention or influence could result in a material change in our operations … and could significantly limit or completely disrupt our ability to offer or continue to offer securities to investors, and/or cause the value of such securities to decline significantly or become worthless,” it added.
In addition, Yang Wu, CEO, President and Founder of Microvast, attended Southwest Petroleum University in Chengdu, China.
The Infrastructure Act, under which the DOE awarded the grant to Microvast, was specifically designed to encourage domestic manufacturing capacity that freed up American supply chains from China. The legislation calls on the DOE not to issue grants to companies that “use battery material supplied by or originating from a foreign entity of concern” or to companies “under the jurisdiction or direction” of China.
Still, Energy Secretary Jennifer Granholm cited Microvast and other grant recipients as examples of companies that will boost “American-made” batteries after the agency announced the grants in October. The company said it will use the money to build a factory in Clarksville, Tennessee.
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“This is a truly extraordinary time for American manufacturing, as President Biden’s agenda and historic investments strengthen the private sector to ensure our clean energy future is made in America,” Granholm said in a statement at the time.
“Making advanced batteries and components here at home will accelerate the transition away from fossil fuels to meet the high demand for electric vehicles, creating more good-paying jobs across the country.”
The statement did not mention Microvast’s ties to China, instead identifying it as a “majority US-owned, NASDAQ-listed company headquartered in Stafford, Texas.” The company went public through a special purpose vehicle in July 2021, allowing it to avoid the normal regulatory scrutiny of the traditional initial public offering process.
In April, the SEC put Microvast on a watch list over financial audit issues related to its external ties, which could lead to the company’s delisting.
The Biden administration decided to award the grant to Microvast despite the SEC action and despite the company’s poor financial performance in recent years. In 2021, the company posted a net loss of $206.5 million and accumulated a deficit of $632.1 million. Its share price has fallen by more than 80% since it first went public.
“Microvast is and always has been headquartered in Texas, and we are actively creating more than 1,000 new US jobs with the expansion of our manufacturing operations in Tennessee, Florida and Colorado,” Microvast Chief Operating Officer Shane Smith said in a statement to Fox News Digital. .
“Microvast is leading efforts to secure domestic battery production, which will strengthen our country’s manufacturing base and reduce reliance on Chinese manufacturers,” Smith said.
In addition, the company is not “pro-China” and is committed to expanding its operations to North America, Microvast’s CEO told Fox News Digital in a phone interview on Friday.
Former President Trump’s administration awarded Microvast a $19 million grant for 12 research projects, and Gov. Ron DeSantis, R-Fla., praised the company for helping to “position Florida as a key player in the development of electric vehicle technology.”
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The Washington Free Beacon first reported on Microvast’s ties to China.
“Giving hundreds of millions of taxpayer dollars to a company based in China that refuses to comply with U.S. securities rules is crazy,” Sen. Marco Rubio, R-Fla. – said on Monday for the Washington Free Beacon the vice president of the Defense Commission for Intelligence Affairs. “Furthermore, any new technology developed in this partnership will almost certainly benefit China given Microvast’s operations there.”
“It’s just another example of the Biden administration not understanding the threat posed by the Chinese Communist Party.”
Top Republicans on the Senate Energy and Natural Resources Committee and the House Science, Space and Technology Committee also expressed concern after the report, writing letters to Granholm demanding more information about the DOE’s review of Microvast.
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“I remind you that the bipartisan infrastructure bill was ostensibly intended to develop strong domestic manufacturing bases and supply chains free from PRC predation,” Sen. John Barrasso, R-Wyo., ranking member of the Energy and Natural Resources Committee, wrote to Granholm. .
“The DOE’s distribution of $200 million in taxpayer funds to a company with ties to China is clearly contrary to the intent of the bipartisan infrastructure bill,” he continued. “It is clear that the DOE’s actions directly undermine the position of the United States in its race against China for technological supremacy.”
The Biden administration has sought to aggressively push a green transition to clean energy, an agenda that includes increasing the proliferation of electric vehicles. Chinese companies currently dominate the global supply chain for electric vehicle batteries and components.
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