Representative Jason Smith, chair of the House Ways and Means Committee, has sent a letter to Tesla CEO Elon Musk seeking more information on the company’s relationship with China’s Contemporary Amperex Technology Co. Limited (CATL). The letter comes as government officials have expressed concerns that foreign entities may be benefiting from electric vehicle (EV) subsidies in the US, leading to potential security issues.
Representative Smith sought answers to several key questions in his letter to Musk, including whether Tesla has contracts with CATL or plans to enter into such agreements. Additionally, Smith asked about Tesla’s efforts to increase the production of vehicles eligible for clean vehicle credits in North America. (via Reuters)
CATL has come under scrutiny due to its partnership with Ford in a $3.5 billion LFP battery plant project in Michigan. Republicans in Congress have been investigating whether this partnership could compromise national security by allowing Chinese influence in critical industries.
The crux of the matter lies in the future of electric-vehicle tax credits and their impact on the automotive industry’s investment decisions. In 2022, Congress passed the Inflation Reduction Act, which prohibits future electric-vehicle tax credits if any battery components are produced or assembled by a “foreign entity of concern.” These rules, set to take effect in 2024 for completed batteries and 2025 for critical minerals used in battery production, aim to reduce reliance on Chinese supply chains.
Ford, in response, defended its battery plant project, emphasized that it is solely owned and controlled by the American automaker. However, Ford is awaiting guidance from the U.S. Treasury to ensure that its partnership complies with the Inflation Reduction Act.