A Japanese company has put a stop to building a $1.6 billion battery factory in South Carolina. The company, AESC, is pausing construction due to uncertainty in policies and the market. This factory was meant to supply batteries for electric vehicles made by BMW.
AESC did not go into detail about the specific issues, but South Carolina’s governor, Henry McMaster, mentioned that the company is concerned about possible changes to federal tax breaks for electric vehicle buyers and incentives for businesses in the electric vehicle sector. There are also worries about tariffs under the Trump administration.
Governor McMaster urged caution, suggesting that stakeholders take a step back and let things settle down. AESC announced the construction halt on Thursday, stating, “Due to policy and market uncertainty, we are pausing construction at our South Carolina facility at this time.” They did promise to restart construction eventually and reaffirmed their commitment to hire 1,600 workers and invest the full $1.6 billion, having already invested $1 billion in the project.
AESC operates multiple facilities worldwide, including in China, the UK, France, Spain, and Germany. In the U.S., they have a plant in Tennessee and are also building one in Kentucky. The company did not mention any changes to these other facilities.
The South Carolina factory was set to produce battery cells for BMW, which is constructing its own battery assembly site near its large auto plant in Greer. Despite AESC’s pause, BMW plans to move forward with opening its plant in 2026.
Earlier this year, AESC scaled back its plans for the South Carolina site by deciding that one factory would be enough to meet BMW’s needs. This change led South Carolina officials to withdraw $111 million in planned financial assistance. However, AESC is still receiving $135 million in grants and $121 million in bonds from the South Carolina Department of Commerce, which said the construction pause would not affect those offers.
South Carolina is making significant investments in electric vehicles. For example, Scout Motors, owned by Volkswagen, plans to invest over $4 billion and create 10,000 jobs for a new plant that will build electric SUVs, scheduled to open in 2027.
The state has a long history of attracting foreign manufacturers like BMW, Michelin, and Samsung, which has contributed to its economic growth. However, there are concerns that Trump’s approach to tariffs could jeopardize these important partnerships. Governor McMaster reassured the public that state and business leaders are in talks with the Trump administration and believe that a resolution will come. He stated that the goal is to achieve strong economic growth and prosperity, and that changes in trade policies are necessary.