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       U.S. Debates How Much to Sever Electric Car Industry’s Ties to China

       Some firms argue that a law aimed at popularizing electric vehicles risks turning the United States into an assembly shop for Chinese-made technology.

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       Huntsman Corporation, a chemical company, started construction two years ago in Texas to make ethylene carbonate, only to halt the project because of falling prices and competition from China. Credit...Callaghan O'Hare for The New York Times

       By Ana Swanson and Jack Ewing

       Ana Swanson writes about trade and economic ties to China, and Jack Ewing covers the automotive industry.

       Nov. 29, 2023

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       The Biden administration has been trying to jump-start the domestic supply chain for electric vehicles so cleaner cars can be made in the United States. But the experience of one Texas company, whose plans to help make an all-American electric vehicle were upended by China, highlights the stakes involved as the administration finalizes rules governing the industry.

       Huntsman Corporation started construction two years ago on a $50 million plant in Texas to make ethylene carbonate, a chemical that is used in electric vehicle batteries. It would have been the only site in North America making the product, with the goal of feeding battery factories that would crop up to serve the electric vehicle market.

       But as new facilities in China came online and flooded the market, the price of the chemical plummeted to $700 a ton from $4,000. After pumping $30 million into the project, the company halted work on it this year. “If we were to start the project up today, we would be hemorrhaging cash,” said Peter R. Huntsman, the company’s chief executive. “I’d essentially be paying people to take the product.”

       The Biden administration is now finalizing rules that will help determine whether companies like Huntsman will find it profitable enough to participate in America’s electric vehicle industry. The rules, which are expected to be proposed this week, will dictate the extent to which foreign companies, particularly in China, can supply parts and products for American-made vehicles that are set to receive billions of dollars in subsidies.

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       The administration is offering up to $7,500 in tax credits to Americans who buy electric vehicles, in an effort to supercharge the industry and reduce the country’s carbon emissions. The rules will determine whether electric vehicle makers seeking to benefit from that program will have the flexibility to get cheap components from China, or whether they will be required instead to buy more expensive products from U.S.-based firms like Huntsman.

       The energy department will also use the rules to help evaluate applicants vying for billions of dollars of grants for battery factories, by giving priority to companies that do not source their material from riskier foreign entities.

       Can the World Make an Electric Car Battery Without China? From mines to refineries and factories, China began investing decades ago. Today, most of your electric car batteries are made in China and that’s unlikely to change soon.

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       Ana Swanson is based in the Washington bureau and covers trade and international economics for The Times. She previously worked at The Washington Post, where she wrote about trade, the Federal Reserve and the economy. More about Ana Swanson

       Jack Ewing writes about the auto industry with an emphasis on electric vehicles. More about Jack Ewing

       A version of this article appears in print on Nov. 29, 2023, Section B, Page 1 of the New York edition with the headline: Electric Cars Face Rules On China . Order Reprints | Today’s Paper | Subscribe

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