AESC stops construction of battery factory: What does this mean for BMW in SC?

AESC stops construction of battery factory: What does this mean for BMW in SC?

The political situation in Washington is causing unrest in the automotive industry, particularly for AESC, a leading Japanese manufacturer of battery technology for electric vehicles. Construction of a major battery cell factory in Florence County, South Carolina has been temporarily paused. This happened in the context of the new trade policies under President Donald Trump, which have potential impacts on investments and sales markets. AESC has already invested over a billion dollars in the plant and intends to restart construction once the situation stabilizes. However, there is currently no exact time for work to resume.

Of particular concern are planned changes to import tariffs and a controversial tax law that would eliminate the $7,500 tax break for buyers of new electric cars. In addition, subsidies for charging infrastructure should be eliminated. Despite these challenges, support from the state of South Carolina remains consistent with more than $255 million in funding commitments. Despite the difficult circumstances, Governor Henry McMaster is cautiously optimistic and emphasizes the state's growth potential.

Impact on production capacities

In February 2025, AESC had already withdrawn its original plans to expand to two factories and only decided to build a single factory. By withdrawing from the second construction phase, the state had to reclaim $111 million in funding. Nevertheless, AESC will fulfill its existing commitments and supply the BMW plants in Spartanburg, South Carolina and San Luis Potosi, Mexico, but only from one factory.

The factory in Florence is designed as a 30GWh gigafactory and is expected to create 1,170 new highly qualified jobs. The battery cells produced at this facility are designed to have 20% higher energy density and improve charging times and range of electric vehicles by 30%. The manufacturing facility runs on 100% net zero carbon energy.

Long-term plans and investments

In addition to ongoing work in South Carolina, AESC has plans to increase total U.S. production capacity to over 70GWh to complement existing factories in Tennessee and support an additional facility under construction in Kentucky. AESC pursues responsible sourcing of battery materials and plans to increase the proportion of recycled materials in the production process.

The activities in Florence are part of a larger strategy to expand EV manufacturing capacity worldwide. Additional gigafactories are planned in France, Great Britain, Japan and Spain. AESC aims to increase its total global capacity to over 150GWh and reach 300GWh by 2026. These goals are in line with the company's efforts to achieve net-zero carbon emissions across all global operations by 2022 and ensure carbon neutrality across its supply chain by 2028.

Given the challenges and political uncertainties, the future of the South Carolina battery factory remains in doubt. But AESC's strategy, which relies on innovative technologies and sustainable practices, could have a long-term positive impact on the industry. While current economic conditions challenge optimism, AESC's investment shows it wants to position itself clearly in the growing electric vehicle market.