[Text/Observer Network Chen Sijia] "High tariffs are like poison that may kill the American battery industry," The New York Times wrote on May 26, stating that to meet America's growing energy needs, many companies are buying batteries from China or investing in building battery plants in the United States. However, President Trump's tariffs on China have caused a sharp rise in battery costs for U.S. companies, which could derail this emerging industry in America.

The report noted that California and Texas, among other places, have large solar and wind power plants. To fully utilize these energy sources, U.S. energy companies have spent billions of dollars installing large-scale batteries across the country over the past few years. The speed of battery production and installation will affect America's ability to meet rapidly growing electricity demands as well as energy costs.

Without these batteries, utility companies would need to invest more money in expensive power plants and transmission lines to handle peak electricity usage during summer or winter. Energy experts say such expenditures will significantly increase electricity prices.

In the production of lithium iron phosphate (LFP) batteries, Chinese enterprises have always held a dominant position. However, the tariffs announced by Trump last month have caused a sharp rise in battery costs for U.S. companies. In the month after the tariffs took effect, many companies stopped importing batteries from China.

Fluence Energy, a Virginia-based company that buys, packages, and installs batteries, has cut its annual revenue forecast by 20%. The company stated that due to the unpredictability of the Trump administration's trade policies, they are delaying new projects and contracts. John Zahurancik, president of Fluence Energy’s Americas region, said, "The problem is not about absolute prices but about the uncertainty in price trends."

LG Energy Solution's battery factory in Holland, Michigan LG Energy Solution

The New York Times pointed out that the LFP battery technology originally came from research at the University of Texas at Austin. However, U.S. manufacturers insisted on using nickel and cobalt to make batteries, while China recognized the value of this technology. Arumugam Manthiram, an engineering professor at the University of Texas who led the related research, said, "For a long time, we didn't get much attention in the U.S."

Currently, the U.S.'s manufacturing capacity is completely unable to meet domestic demand for LFP batteries, so many companies are increasing their investments in U.S. battery production. For example, LG Energy Solution's battery plant in Holland, Michigan, which used to be responsible for producing car batteries, began producing LFP batteries in May this year.

Most U.S. electric vehicles use batteries made from materials such as nickel and cobalt, which are more expensive than iron and phosphates but can store more energy. LG Energy Solution had planned to expand the factory to increase car battery supply. However, the development of electric vehicles in the U.S. has been slower than expected, forcing the company to change its expansion plans.

The U.S.'s LFP battery production capacity is completely unable to meet the rapidly growing demand The New York Times report screenshot

Now, LG Energy Solution is equipping the factory in Michigan with production equipment for LFP batteries, which is expected to cost $1.4 billion. Tristan Doherty, executive of LG Energy Solution's U.S. subsidiary, claimed that by early 2026, the factory in Michigan might produce "batteries containing no Chinese components at all."

But Doherty also compared tariffs to "poison," believing that Trump's tariff policy could "derail" the U.S. battery industry. He told The New York Times, "Dosage determines toxicity, right? A little tariff at the right time and level can guide us toward a better direction. But too much and too fast tariffs will kill us."

Besides the tariff issue, the Trump administration also plans to reduce subsidies for the U.S. battery industry, causing concern in the industry. The report noted that with Trump's support, Republican members of the U.S. House of Representatives passed a budget bill that aims to drastically cut subsidies for battery manufacturing and usage, making it harder to apply for battery manufacturing and installation subsidies.

In response to The New York Times' request for comment, a U.S. government spokesperson did not comment on the battery industry, only criticizing wind and solar energy: "The U.S. wind and solar industries have relied on more than thirty years of subsidies. Despite these subsidies, such energy cannot compare with nuclear, coal, and natural gas in terms of affordability, reliability, and safety."

Antoine Vagneur-Jones, an analyst at Bloomberg New Energy Finance, pointed out that if the Republicans' budget bill eventually passes, it will deprive battery manufacturers and energy companies installing batteries of the opportunity to receive tax breaks.

Doherty also said that without tax breaks, LG Energy Solution's factory would not be profitable in the U.S. at current battery prices. He warned, "All of this will only bring more uncertainty. Investments, especially large ones, hate uncertainty."

This article is an exclusive contribution from Observer Network and cannot be reprinted without permission.

Original source: https://www.toutiao.com/article/7508757957379670562/

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