'China, No IRA Evasion'... US House Demands Tesla Disclose Contract Details with CATL

Chair of the Revenue Committee Sends Letter to Musk

The U.S. House of Representatives has urged electric vehicle maker Tesla to fully disclose its cooperation with Chinese battery companies. Concerns have been raised in the U.S. Congress that subsidies Tesla receives under the Inflation Reduction Act (IRA) may flow to Chinese battery firms.

[Image source=Yonhap News]

On the 20th (local time), according to the U.S. House Ways and Means Committee, Chairman Jason Smith (R-Missouri) sent a letter the previous day to Tesla CEO Elon Musk, demanding that he reveal the current status of contracts with CATL, China’s largest battery manufacturer, and any future agreements.

In the letter, Chairman Smith asked whether Tesla had entered into intellectual property or technology license agreements with any companies that could be considered "foreign entities of concern," similar to the contract between Ford Motor Company and CATL. Earlier, Ford and CATL agreed to invest $3.5 billion (about 4.65 trillion won) to build a new electric vehicle battery plant in Michigan. Subsequently, Smith requested detailed explanations from the U.S. automotive industry, including Tesla, regarding cooperation similar to Ford’s partnership.

Smith stated, "Tesla’s response did not fully alleviate these concerns, prompting a request for additional information," adding, "I do not agree with the policy of providing taxpayers with massive subsidies for electric vehicles. Especially, these funds must not flow to the Chinese Communist Party or corporations and organizations that do not share our interests."

He urged that clear regulations to prevent this should be established in the Treasury Department’s guidelines.

Currently, Chinese electric vehicle battery companies are attempting to circumvent the IRA by establishing joint ventures with U.S. firms. The U.S. provides subsidies under the IRA if batteries are assembled in electric vehicles domestically and at least 50% of the total value is produced in North America or countries with which the U.S. has a Free Trade Agreement (FTA). Since Chinese-made batteries are ineligible for subsidies under this law, Chinese companies are neutralizing the IRA by forming joint ventures with American companies or companies from FTA partner countries. Tesla currently sources CATL batteries for its electric vehicles, raising the possibility that the two companies may establish a battery joint venture in the U.S.

Earlier, on the 13th, Mike Gallagher, Chairman of the U.S. House Select Committee on the Strategic Competition between the United States and the Chinese Communist Party, and Representative John Moolenaar sent a letter to Treasury Secretary Janet Yellen, arguing that the U.S. government should not support the investment plans of Chinese battery company Gotion High-Tech in Michigan.

This content was produced with the assistance of AI translation services.