Is China's overseas expansion hitting a sudden halt? China's energy storage industry faces a global test…

Benefiting from the explosive growth of the global Energy Storage market, overseas expansion is becoming a new blue ocean for Chinese energy storage companies. Related data shows that in the first half of this year, domestic companies secured nearly 200 overseas energy storage orders and collaborations, with a total scale exceeding 160 GWh, representing a year-on-year growth rate of over 200%, demonstrating unprecedented enthusiasm for overseas expansion.

However, in an international environment characterized by economic downturn, high trade barriers, and differing perceptions, the process of expanding overseas in the energy storage sector is destined to be fraught with difficulties. Recently, Guoxuan High-Tech encountered significant trouble.

On October 23, the Michigan Economic Development Corporation (MEDC) issued a formal notice to Guoxuan High-Tech's subsidiary, Guoxuan USA, confirming that the company's $2.4 billion lithium battery factory project in Greentown, Mecosta County, had defaulted.

The state indicated that because Guoxuan High-Tech failed to complete the agreed investment and construction tasks according to the agreed-upon timeline, Michigan will reclaim the $23 million in land acquisition subsidies previously allocated to the company; and cancel the remaining $175 million in tax incentives and financial subsidies originally stipulated.

On October 28th, Guoxuan High-Tech issued a public statement confirming that its Michigan lithium-ion battery plant project had been suspended. The company emphasized that the main reason for the suspension was a failure to reach an agreement with the local government on policy, rather than any fault of the company itself.

This new energy project, once highly anticipated, ultimately stalled after three years of twists and turns. Its failure is not only a setback for one company, but also a wake-up call for all Chinese energy storage companies going global. The international market remains open, but the competition is far more complex than imagined.

Looking back at the failure of Guoxuan High-Tech's Michigan project, the fabricated "China threat" narrative by some local and federal lawmakers was a key factor leading to its collapse.

In the current US political climate, a "tough stance on China" has become one of the few remaining consensuses between the Democratic and Republican parties. Any action perceived as having interests linked to China is likely to become a target of campaign attacks and public scrutiny.

This trend has intensified since the Trump administration took office, with a significant shift in energy policy and substantial adjustments to the previous administration's subsidy and tax systems for new energy projects. For example, the Big and Beautiful Act introduces specific provisions targeting particular entities and behaviors, explicitly imposing strict regulations on "Restricted Foreign Entities" (FEOCs). The definition of FEOCs covers companies with ties to countries such as China, Russia, Iran, and North Korea, and the criteria for determination include multiple dimensions such as equity structure, control, and actual operating location.

In particular, the act directly links eligibility for the Clean Energy Investment Tax Credit (ITC) and Production Tax Credit (PTC) to the so-called "Chinese component percentage" in the supply chain, intending to weaken the participation of Chinese companies in US energy projects through policy.

Furthermore, the US Department of Energy recently announced the cancellation of funding for 223 clean energy projects approved during former President Biden's administration, totaling $7.56 billion (approximately 53.8 billion yuan). This decision effectively overturned several previously approved Green Energy subsidies, significantly impacting sixteen states that supported the Democratic Party in last year's election.

U.S. Agriculture Secretary Brooke Rawlings recently clarified the Department of Agriculture's stance on social media, announcing that the department will end its support policies for Renewable Energy projects on farmland and explicitly exclude solar panel products from "foreign adversary countries" such as China. This series of actions demonstrates that the United States is constructing a "de-Sinicization" energy supply chain system from multiple dimensions, including legislation, industry, and land use.

The setbacks faced by Guoxuan High-Tech's Michigan project are a microcosm of the difficulties Chinese energy storage companies are encountering overseas, while also accelerating the industry's shift from reliance on a single market to diversified development. Although the road ahead remains bumpy, these challenges are forcing Chinese companies to adopt a more flexible approach to find opportunities amidst the crisis.

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