Missouri Lawmaker Urges Treasury Action to Halt US Tax Dollars Flowing Through Automakers to China

Rep. Jason Smith sends letter to Tesla CEO Elon Musk asking whether he has or is contemplating contracts with Chinese battery manufacturer.
Missouri Lawmaker Urges Treasury Action to Halt US Tax Dollars Flowing Through Automakers to China
A line of electric vehicles during the start of the production at Tesla's "Gigafactory" in Gruenheide, near Berlin, on March 22, 2022. (Patrick Pleul/Pool/AFP via Getty Images)
Savannah Hulsey Pointer
9/20/2023
Updated:
9/21/2023

Concerned that U.S. electric vehicle subsidies were improperly migrating to foreign entities, a senior Republican in Congress asked Tesla on Sept. 19 to describe its relationship with Chinese battery manufacturer CATL.

Rep. Jason Smith (R-Mo.), the chair of the House Ways and Means Committee, on Sept. 19 sent a letter (pdf) to Tesla CEO Elon Musk asking whether the electric vehicle (EV) manufacturer has, or is contemplating having, contracts with CATL.

Mr. Smith stated that the committee is concerned that CATL "may be trying to negotiate other agreements like the agreement with Ford." Reuters previously reported that Tesla was CATL's largest customer.

Ford Motor's proposed $3.5 billion investment to construct a battery plant in Michigan using technology from CATL, the world's largest battery manufacturer, has been investigated by Republicans in Congress.

In order to make investment decisions regarding the production of batteries for their transition to EVs, the auto industry is monitoring the implementation of new regulations regarding future EV tax credits.

Congress enacted the $430 billion Inflation Reduction Act in 2022, which prohibits future EV tax credits if battery components are manufactured or assembled by a "foreign entity of concern."

The foreign-entity-of-concern rules are intended to wean the United States off Chinese supply chains and will go into effect in 2024 for finished batteries and in 2025 for critical minerals used to manufacture them.

There is some question as to what constitutes a "foreign entity of concern," and as of yet, no foreign battery supplier has been designated as such.

Mr. Smith asked Mr. Musk whether, in addition to bolstering North American manufacturing, his company had "taken any steps to increase production of vehicles eligible for the clean vehicle credit."

The lawmaker also sent a letter (pdf) to Nissan on Sept. 19 inquiring about its battery suppliers and whether its U.S. manufacturing plans include the production of batteries or battery components for electric vehicles.
In a letter (pdf) on Sept. 19, Mr. Smith urged Treasury Secretary Janet Yellen to promptly issue guidance and be clear that taxpayer money can't move toward foreign entities of concern, such as China.

“While I do not agree with the policy that provides massive taxpayer-funded subsidies for electric vehicles, certainly we should be able to agree that taxpayer funds should not flow in a way that benefits the Chinese Communist Party (CCP) or other entities who do not share our aligned interests," Mr. Smith said.

"Treasury guidance should make clear in the most comprehensive way possible that taxpayer subsidies cannot flow to foreign entities of concern through any structuring mechanism conceivable. Guidance on this topic should be as strict and prompt as possible so there is no ambiguity that the benefit of taxpayer subsidies cannot end up in the hands of our adversaries."

The Department of the Treasury didn't immediately respond to The Epoch Times' request for comment.

Reuters contributed to this report.