AESC, a Japanese battery manufacturer, has paused construction on its $1.6 billion factory in Florence, Zuid-Carolina, designed to supply batteries for BMW‘s electric vehicles (EVs). The decision, stems from uncertainties in federal EV policies and potential tariff changes under President Donald Trump’s administration, raising concerns for the EV industry’s growth in the U.S. reports The Independent.

Policy Uncertainty Impacts EV Battery Production

AESC cited “policy and market uncertainty” as the primary reason for halting the project, according to the company’s official statement. The Florence facility was set to produce battery cells for BMW, which is constructing its own battery assembly site near its auto plant in Greer, South Carolina.

The pause reflects broader concerns about the future of federal tax incentives for EV buyers and businesses, which could be scaled back under Trump’s administration.

South Carolina Governor Henry McMaster acknowledged the shifting landscape, urging caution: “What we’re doing is urging caution — let things play out because all of the changes are taking place,” he told reporters on Thursday.

The potential loss of EV tax breaks and new tariffs could increase costs for manufacturers like AESC, which operates facilities globally, including in China, the Verenigd Koninkrijk, Frankrijk, Spain, Duitsland, and the U.S. (with a plant in Tennessee and another under construction in Kentucky). AESC has not indicated changes to its other U.S. operations, but the South Carolina pause signals a cautious approach to expansion amid regulatory uncertainty.

$1.6 Billion South Carolina Ev Battery Plant Halts Amid Policy Shifts

Economic and Operational Implications for South Carolina

The Florence plant was a significant investment for South Carolina, promising 1,600 jobs and a $1.6 billion economic boost. The state had committed $135 million in grants through the South Carolina Department of Commerce and $121 million in bonds to support the project.

Despite the pause, state officials remain optimistic. The Department of Commerce stated that the construction halt would not prompt them to retract the financial incentives, signaling confidence in the project’s eventual resumption.

BMW, the primary customer for the Florence plant’s output, stated that AESC’s decision does not affect its plans to open its Greer battery assembly site in 2026. However, the pause could delay the supply chain for BMW’s EV production, potentially impacting timelines for new electric models. South Carolina has been a hub for EV manufacturing, with companies like Volkswagen-owned Scout Motors planning a $4 billion plant to build electric SUVs, set to open in 2027 and employ 10,000 workers. The state’s economic strategy relies heavily on such investments, but policy shifts could challenge this momentum.

Industry Trends and the Road Ahead

The EV sector in the U.S. is at a crossroads. Federal support, including tax credits for EV buyers, has driven growth in domestic battery production, but potential policy rollbacks could shift the landscape.

AESC’s decision highlights how sensitive the industry is to regulatory stability. Battery plants require significant upfront investment—$1.6 billion in this case—and long-term certainty to justify such expenditures. If tariffs on imported EV components rise, manufacturers may face higher costs, which could be passed on to consumers, slowing EV adoption.

Governor McMaster remains optimistic, emphasizing dialogue with the administration: “I think the goal of the president and the administration is to have robust economic growth and prosperity and there is no doubt there has to be changes made in our international trade posture and President Trump is addressing that,” he told reporters.

For now, AESC has not specified a timeline for resuming construction, leaving the future of the Florence plant—and its role in South Carolina’s EV ecosystem—uncertain. As the industry watches for policy clarity, stakeholders hope for a resolution that supports continued growth in EV manufacturing.

Photos courtesy of BMW and CoStar.