President Joe Biden's Department of Energy is touting a grant to a lithium battery company as a move that would help herald the shift to green energy and ensure the United States is cultivating domestic sources of energy. It did not say, however, that the Texas company receiving the grant operates primarily from China and is under scrutiny from American financial regulators.
The DOE announced in October that it would give the $200 million award to Microvast Holdings to build a battery separator facility in Tennessee, using funding from the Bipartisan Infrastructure Law. At the time, Energy Secretary Jennifer Granholm said the grant would "supercharge the private sector to ensure our clean energy future is American-made."
While the DOE described Microvast as a "majority U.S.-owned company, traded on NASDAQ" and "headquartered in Stafford, Texas," financial records show the company operates primarily out of China. Microvast itself says the Chinese government "exerts substantial influence over the manner in which we must conduct our business activities and may intervene, at any time and with no notice." The company was also recently added to a Securities and Exchange Commission watchlist of Chinese companies that are on track to be delisted from NASDAQ for failing to comply with U.S. auditing requirements.
The DOE award demonstrates the challenges posed by the green energy transition sought by Democrats and the Biden administration and raises questions about the vaunted $1.2 billion Bipartisan Infrastructure Law funding. That bill was meant to boost U.S. battery companies and strengthen the domestic clean energy supply chain, which has been highly dependent on China. The grant is also drawing calls for additional oversight from Congress. The infrastructure law, as written by lawmakers, states that the DOE should avoid funding projects that "use battery material supplied by or originating from a foreign entity of concern," which includes companies "subject to the jurisdiction or direction" of China.
Sen. Marco Rubio (R., Fla.) told the Washington Free Beacon that the Biden administration "has a lot of explaining to do."
"Giving hundreds of millions of taxpayer dollars to a company whose operations are based in China that refuses to comply with American securities rules is crazy," said Rubio. "What's more, any new technology developed in this partnership is almost certainly going to benefit China given Microvast's operations there. It is just another example of the Biden administration not understanding the threat posed by the Chinese Communist Party."
Former DOE officials said the funding was highly concerning and is likely to set off alarms with legislators.
"The Biden appointees knew from the outset that because of China's aggressiveness in infiltrating U.S. energy and high-tech companies they were going to need to be extra vigilant about where these [infrastructure] funds went," one former DOE official told the Free Beacon. "A simple Google search shows enough of a relationship between China and the shell company they're using to access U.S. taxpayer funds to raise questions."
"Now Congress, [the Government Accountability Office], or someone needs to be asking what information did the applicant provide about their relationship with China, how far up does that relationship go," the official said.
The DOE did not respond to a request for comment.
In its 2021 annual SEC report, Microvast describes itself as a "holding company" that conducts its business "principally through our subsidiary in China."
"A substantial portion of our operations and manufacturing and most of our current customers are in the [People's Republic of China]," said Microvast, adding that it has received subsidies from the Chinese government and that most of its customers are associated with "state-owned companies in the PRC."
In May, the SEC added Microvast to a list of Chinese companies that aren't in compliance with U.S. auditing requirements under the Holding Foreign Companies Accountable Act. The law, which went into effect last spring, is designed to prevent Chinese companies listed on the U.S. stock exchanges from using non-approved China-based auditors to obscure their finances.
Companies that remain on the list for three consecutive years will be delisted from NASDAQ. They are also required to disclose whether they have any directors who are members of the Chinese Communist Party, or CCP ownership.
Microvast CEO Yang Wu is a U.S. citizen, according to Microvast spokeswoman Sarah Alexander. Another Microvast director, Arthur Wong, a Hong Kong citizen based in Beijing, is the chairman of the audit committee at Daqo New Energy Corporation, whose subsidiary was sanctioned by the Biden administration last year for its connections to slave labor in Xinjiang.
Alexander said none of Microvast's directors, including Wu, are members of the CCP. She said the business primarily operates out of Huzhou, China, but has been expanding its manufacturing and research facilities to Germany and the United States.
Alexander said the company's inclusion on SEC's non-compliance list could also change due to "recent developments on the [Holding Foreign Companies Accountable Act], including an agreement between the U.S. and Chinese governments to allow for" full inspections. SEC officials have reportedly been trying to negotiate an agreement with Beijing as of September.
DOE Touts $200M Grant to Lithium Battery Company as Boon to American-Made Clean Energy. The Company Operates Primarily From China. - Washington Free Beacon
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