Chinese-owned AESC has halted construction of its $1.6 billion battery plant in America's emerging "Battery Belt," citing economic uncertainty tied to President Trump's trade war and tariffs and the potential early termination of federal clean energy subsidies.

Construction of AESC's electric-vehicle battery plant in Florence, South Carolina, began in 2023 after securing a deal with BMW to make battery cells. 

On Thursday, the company sent a letter to employees regarding the construction halt, as obtained by The Wall Street Journal. The letter laid out:

• Tariffs on Chinese-made machinery, steel, and aluminum, which significantly raise costs.

• A proposed tax bill in Congress that would end EV battery production subsidies early and restrict eligibility for China-linked companies.

• Broader industry pressure as automakers slow or cancel EV rollouts.

"Our intent is to finish construction of the facility once stability and predictability have returned to the market," Knudt Flor, AESC's chief executive for the U.S. and Europe, wrote in the memo.

Current and former employees told WSJ that construction of the building has been completed, but all work on installing equipment and battery cell assembly lines has been halted.

Sources noted that AESC would face steep tariffs on EV battery machinery imported from China and said that recent steel and aluminum tariffs imposed by the Trump administration have further compounded the company's cost challenges.

In recent years, Biden-era green energy policies fueled a surge in battery factory construction across parts of the Midwest and Southeast, driven by cheap land, proximity to major automotive hubs, and generous state-level incentives. This region—stretching from Tennessee and Alabama to the Carolinas, Ohio, and Michigan—has become known as America's "Battery Belt."

Some major projects across the belt include:

• Ford and SK On: $11.4B battery and EV campuses in Tennessee and Kentucky

• LG Energy Solution: Multiple joint ventures with GM, Stellantis, and Honda in Michigan, Ohio, and Indiana

• Hyundai and SK: $5B EV battery plant in Georgia

• Toyota: Expanding EV battery production in North Carolina

"Now many of those subsidies are being targeted by Republicans at the same time regulations and tax credits aimed at driving EV sales are also at risk," WSJ noted, adding, "The current version of a tax bill before Congress would end EV battery production subsidies a year early and make them unavailable to companies with ties to certain countries, including China."