Battery Plant Construction Pauses in South Carolina Amid Policy Uncertainty

KEY POINTS

• Battery manufacturer AESC paused its $1.6B South Carolina battery plant construction due to market uncertainty.

• The project remains eligible for state incentives, which South Carolina is not clawing back, signaling ongoing confidence despite the construction halt.

• The pause highlights how federal policy and global trade shifts can impact major construction projects in the EV sector.
  
  

Construction crews at the $1.6 billion Automotive Energy Supply Corp. (AESC) electric-vehicle battery plant in Florence, South Carolina, have been told to pause construction.

The Japan-based company cited “policy and market uncertainty,” according to the Post and Courier, without naming specific issues. The facility was set to supply batteries for electric BMWs.

Economic Uncertainties

Although the company did not state specifics for the pause, one issue is the potential loss of federal tax breaks for electric vehicle (EV) buyers and incentives for EV manufacturers.

Secondly, there is the uncertainty over tariffs and their impact on imported machinery and materials, particularly with evolving White House policies.

Tariffs on Chinese imports, including battery plant equipment, have fluctuated, reaching 145% before a recent temporary agreement between the U.S. and China. 

An undated image of the signage and plant rendering for the Automotive Energy Supply Corp. (AESC) electric-vehicle battery plant in Florence, South Carolina. Image: Florence County Economic Development Partnership

Consumer adoption of EVs in the US may also be impacting the decision. A survey published last week by AAA found that “Only 16% of U.S. adults report being ‘very likely’ or ‘likely’ to purchase a fully electric vehicle (EV) as their next car, the lowest percentage recorded of EV interest since 2019.”

AAA also reported, “Interest in EVs to take advantage of tax credits and rebates has decreased, dropping from 60% of those saying last year they are likely to buy an EV to 39% this year.”

Project Incentives Signal Confidence

South Carolina had offered AESC $135 million in grants and $121 million in bonds to support the commercial construction project.

Even with construction paused, the state Department of Commerce says it will not claw back those incentives, signaling ongoing confidence in the project’s future.

While the Florence battery plant construction is on hold, the EV-related construction outlook in South Carolina remains positive:

• Volkswagen-owned Scout Motors is investing $2 billion in a new electric SUV plant, expected to create 4,000 jobs and open in 2027.
  
  
• The state’s automotive sector led with $4.3 billion in new investment in 2023, much of it tied to EVs and batteries.
  
  
• South Carolina is building out its EV infrastructure, including charging stations and providing support for manufacturers.

For contractors, building product manufacturers, and construction trades, AESC’s pause shows how federal policy and global trade can impact construction projects. 

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