Despite the resurgence of manufacturing in the United States, the reality is much more subtle and has been quietly underway thanks to the Inflation Reduction Act. This legislation was designed to reduce US dependence on Chinese supply chains, especially by discouraging the use of Chinese-made batteries, while also investing in cutting-edge technologies for the future, with a strong focus on clean energy.
However, with the EV tax credits set to expire on September 30th, a major player like BMW is reconsidering his strategies, finding it more cost-effective, at least in the short term, to source low-cost batteries from China once again.
BMW, and another big one like General Motors, would have preferred to use US-made batteries for their upcoming EVs if federal incentives hadn’t ended prematurely. The $7,500 consumer tax credit was crucial to offset the high costs of EVs, driven mainly by battery prices, while manufacturers worked to ramp up local production and supply chains. But then, US clean energy programs stalled.
Today, BMW (and GM) rely heavily on China’s proven battery manufacturing expertise. The Wall Street Journal reported GM will buy lithium iron phosphate (LFP) batteries from CATL, the world’s largest battery maker, for the next-gen Chevy Bolt EV. Despite facing tariffs of roughly 80%, CATL’s scale and expertise may still offer GM a financial edge. BMW faces a similar challenge. Its battery supplier, Automotive Envision Supply Corporation (AESC), a Japanese company with plants in China, halted expansion of two facilities earlier this year due to political and market uncertainty.
The South Carolina AESC plant was supposed to supply battery cells to BMW’s nearby assembly plant, but now BMW will import Chinese-made cells, where production costs remain competitive despite tariffs thanks to an established distribution network.
Regardless of battery origin, EV offerings are becoming increasingly appealing. BMW is set to unveil the new iX3 model and the prototype impressed many reporters with its performance and technology.
