Japanese Company Pauses U.S. battery plant pauses amid tariff uncertainty – Eurasia Business News

By John Meyer, consultant in financial affairs – Eurasia Business News, June 7, 2025. Article no. 1539.

A Japanese company has paused construction of a $1.6 billion battery factory in South Carolina, intended to produce batteries for electric BMW vehicles, citing uncertainty around U.S. policies and tariffs as the main reason for the halt.

While Automotive Energy Supply Corp. didn’t specify what those problems are, South Carolina’s Republican governor said the company is dealing with the potential loss of federal tax breaks for electric vehicle buyers and incentives for EV businesses as well as tariff uncertainties from President Donald Trump’s administration.

This pause reflects broader challenges in the automotive supply chain caused by a 25% tariff imposed on imported auto parts from Japan and other countries starting May 3, 2025, which has significantly increased costs for engines, transmissions, electrical components, and batteries.

The tariff has disrupted decades-old trade patterns between the U.S. and Japan, forcing manufacturers to reconsider sourcing strategies. For example, the tariff adds about $1,875 to the cost of a $7,500 electric vehicle battery pack, making battery production more expensive and uncertain.

This environment of tariff-induced cost increases and policy unpredictability has led to delays and caution among battery manufacturers, including this Japanese company’s decision to pause the South Carolina plant’s construction5.

Additionally, Japanese automakers like Honda are adjusting their supply chains by procuring batteries domestically within the U.S. to mitigate tariff risks, such as sourcing batteries from Toyota’s U.S. plants for hybrid vehicles.

The tariffs, part of ongoing trade tensions, threaten to slow the expansion of battery production critical to electric vehicles and grid energy storage, with industry experts warning that these tariffs could discourage new investments and delay projects.

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In summary, the Japanese company’s pause on the U.S. battery plant construction is a direct consequence of tariff uncertainties and increased costs stemming from recent U.S. trade policies targeting imported automotive parts and batteries, creating significant challenges for the electric vehicle supply chain.

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