BMW’s Chinese Battery Gamble: Tariffs Threaten U.S. EV Dreams in Shocking Shift

Buckle up, EV enthusiasts: BMW might ship in Chinese batteries for its U.S.-built Neue Klasse models, all because a key supplier hit the brakes on a massive American factory. Drama in the supply chain?

BMW is weighing the option to import batteries from China for its upcoming electric vehicles assembled in the United States, following a supplier’s decision to halt construction on a key domestic factory. This shift highlights ongoing challenges in the EV supply chain amid rising tariffs and policy uncertainties.

Supplier Halts US Battery Plant Amid Financing and Tariff Hurdles

Automotive Energy Supply Corp. (AESC) has paused work on a $1.6 billion battery cell factory in Florence, South Carolina, roughly 175 miles east of BMW’s assembly plant in Greer. Sources indicate AESC canceled plans to supply BMW from this U.S. site and may repurpose the unfinished facility, reports Automotive News. In June, AESC attributed the hold to “policy and market uncertainty,” with additional struggles in securing financing. U.S. tariffs have driven up costs, as AESC intended to import some equipment from China.

AESC spokesman Brad Grantham declined to comment on BMW supply plans due to “confidentiality restrictions.” He added that the company has “no new update” on the project but will “continue to keep stakeholders and the local community informed and fully intend to meet our commitments to invest $1.6 billion and create 1,600 jobs in the coming years.”

This development forces BMW to consider alternatives. Importing cells from AESC’s operations in China—where the supplier, majority-owned by China’s Envision Group, benefits from established production scale—could prove more economical short-term, despite potential tariffs. Lithium-ion batteries from China may face an 82 percent U.S. tariff in 2026.

Challenges in Switching Battery Suppliers for Neue Klasse EVs

BMW remains committed to launching its Neue Klasse electric vehicles in late 2026 at the Greer plant, featuring proprietary sixth-generation cylindrical cells. These batteries promise 30 percent more driving range than the current fifth-generation prismatic cells, along with higher energy density and faster charging.

However, pivoting to a new supplier complicates matters. BMW has advanced far in developing these cells, with Chinese partners Contemporary Amperex Technology Co. Limited and EVE Energy already involved. Sources note that switching affects product development, vehicle integration, and battery management software.

Industry experts emphasize the difficulties. “Even with the same chemistry, validation and integration work may need to be revisited,” said S&P Global Mobility analyst Stephanie Brinley. “The shift may not be as simple as a consumer choosing Duracell because the local hardware store is out of Energizer batteries.”

Conrad Layson, senior alternative propulsion analyst at AutoForecast Solutions, added that automakers design EV powertrains and batteries for seamless operation. “Validating those systems can take 18 months or more, which doesn’t give BMW the ability to find another battery partner without readjusting its production schedule,” Layson said.

Analysts view Chinese imports as a likely interim solution while BMW seeks a long-term U.S. source. This raises questions about maintaining production timelines without delays that could impact EV availability for consumers.

Broader EV Industry Pullback Under Policy Shifts

This situation reflects wider trends in the EV sector. President Donald Trump’s rollback of federal tax incentives and emissions standards has slowed sales, prompting automakers to curb ambitions. General Motors reduced its U.S. battery plants from four to three, while Ford delayed one of two planned facilities in Kentucky. Over $13 billion in storage and EV battery projects have been canceled in the past year, according to Atlas Public Policy.

AESC itself halted a $2 billion plant in Bowling Green, Kentucky, last September, tied to reduced output from customer Mercedes-Benz. Grantham stated AESC “continues to make infrastructure improvements on site and will meet our commitment to creating 2,000 jobs at the Bowling Green facility.”

These regulatory and economic pressures underscore operational risks for EV manufacturers. Building on that, they highlight economic implications, such as job commitments in limbo and higher costs passed to consumers. For EV enthusiasts, this could mean delayed access to advanced models like BMW’s Neue Klasse, which prioritize range and efficiency. Yet, the industry’s adaptability—through temporary imports or supplier shifts—suggests pathways to sustain growth despite uncertainties. BMW’s approach will test how effectively automakers navigate these hurdles to deliver reliable, high-performance electric vehicles.