South Carolina’s electric vehicle (EV) industry was poised to take a giant leap forward with the construction of a $1.6 billion battery factory by Japanese company Envision AESC in Florence County. The ambitious project promised to create over 1,600 high-paying jobs and supply critical battery cells for BMW’s next-generation Neue Klasse EVs. However, in June 2025, AESC abruptly halted construction, citing “policy and market uncertainty.” The stalled AESC battery factory has sent ripples through the state’s economy and raised questions about the future of America’s EV revolution. This article explores the reasons behind the pause, its implications for South Carolina and BMW, and the broader challenges facing the U.S. EV battery industry.
The Rise and Pause of the Stalled AESC Battery Factory
In December 2022, Envision AESC announced plans to build a state-of-the-art battery cell gigafactory in Florence County, South Carolina. The 1,000-acre facility was designed to produce cylindrical battery cells for BMW’s Spartanburg plant, which is gearing up to manufacture at least six all-electric BMW X models by 2030. The project was a cornerstone of South Carolina’s push to become a hub for EV manufacturing, bolstered by $135 million in state grants and $121 million in bonds. AESC’s initial $810 million investment was later doubled to $1.6 billion, with plans to create 1,620 jobs, making it one of the largest economic development deals in the Pee Dee region.
Construction began in June 2023, and the factory was expected to commence commercial operations by 2026, powered by 100% net-zero carbon energy. AESC had already invested over $1 billion and hired more than 200 employees by mid-2025. However, on June 5, 2025, the company announced a pause in construction, leaving the stalled AESC battery factory in limbo. The decision was driven by “policy and market uncertainty,” a phrase that encapsulates the turbulent regulatory and political landscape under the Trump administration.
Policy Uncertainty and the Trump Administration’s Impact
The stalled AESC battery factory is a casualty of broader policy shifts that have shaken the U.S. EV industry. The Biden administration’s Inflation Reduction Act (IRA) of 2022 provided significant incentives for EV battery manufacturers, including grants and loans to offset the high costs of building domestic production facilities. These incentives attracted over $130 billion in investments across the automotive sector, with South Carolina emerging as a key beneficiary.
However, the Trump administration’s agenda to dismantle Biden-era clean energy programs has created a climate of uncertainty. A signature spending bill, passed by House Republicans in May 2025, proposes eliminating federal EV tax credits for consumers and scrapping billions in IRA funding for battery manufacturers. The bill’s fate now rests with the Senate, where amendments are expected, but the threat of reduced incentives has already prompted companies like AESC to reassess their investments.
Tariffs are another complicating factor. The Trump administration’s renewed focus on trade policies, including proposed 25% tariffs on goods from Canada and Mexico, has raised concerns about increased costs for EV components. AESC, though headquartered in Japan, is majority-owned by China’s Envision Group, which could expose it to additional scrutiny under proposed legislation that restricts subsidies for companies with ties to certain countries. These tariff risks and policy shifts have contributed to the stalled AESC battery factory, as the company adopts a cautious “wait-and-watch” approach.
South Carolina Governor Henry McMaster, a supporter of Trump’s trade policies, acknowledged the uncertainty but urged patience. “Let things play out, because all of these changes are taking place,” he told reporters, expressing confidence that the state’s economy would remain resilient. Despite the pause, AESC has vowed to resume construction “once circumstances stabilize” and meet its commitment to invest $1.6 billion and create 1,600 jobs.
Implications for BMW and the Neue Klasse EVs
BMW, the primary customer for the stalled AESC battery factory, faces significant challenges as a result of the construction pause. The Florence facility was set to supply battery cells for BMW’s $700 million battery assembly plant in Woodruff, South Carolina, scheduled to open in 2026. These cells were critical for powering the Neue Klasse EVs, including the electric X3 SUV, expected to debut in the U.S. in September 2025. The Neue Klasse lineup is central to BMW’s goal of having EVs account for half its global production by 2030.
With the stalled AESC battery factory, BMW’s supply chain faces potential disruptions. The company had planned to source U.S.-made cells from AESC for its Woodruff plant, which would then send completed battery packs to its Spartanburg production hub. BMW has stated that the pause will not affect its 2026 timeline for the Woodruff plant, as it can source cells from other suppliers, such as China-based CATL. However, relying on overseas suppliers could introduce logistical challenges and higher costs, especially if tariffs on imported components rise.
The stalled AESC battery factory also raises questions about BMW’s plans for its Mexico plant, which was expected to receive cells from Florence starting in 2027. Without a clear timeline for resuming construction, BMW may need to adjust its production schedules or seek alternative suppliers, potentially impacting the cost and availability of its Neue Klasse EVs in the U.S. market.
Broader Challenges for the U.S. EV Battery Industry
The stalled AESC battery factory is not an isolated incident but part of a broader trend affecting the U.S. EV battery industry. Several billion-dollar clean energy projects faced setbacks in 2025 due to policy uncertainty and political pushback. For example, Aspen Aerogels halted construction on a $1 billion Georgia plant designed to produce fire suppressants for EV batteries, while Kore Power shelved plans for a $1 billion battery factory in Arizona. These pauses reflect the industry’s sensitivity to regulatory stability, as battery plants require significant upfront investments and long-term certainty to justify their costs.
Despite these challenges, the EV battery industry continues to grow, albeit at a slower pace. Electric vehicle sales are rising both nationally and globally, and some completed projects are adjusting to lower output to align with market demand. However, the potential repeal of consumer tax credits, which could reduce EV sales by 27% according to a National Bureau of Economic Research study, poses a significant risk. Automakers are also shifting away from all-electric goals in favor of a mix of EVs and plug-in hybrids, further complicating the industry’s growth trajectory.
The stalled AESC battery factory highlights the delicate balance between policy, investment, and market dynamics. As Congress debates the future of EV incentives and clean energy funding, companies are forced to navigate an unpredictable landscape. Industry analysts predict that more manufacturers may pause or realign their projects until clearer policy directions emerge, potentially driving investments overseas if U.S. regulations remain volatile.
South Carolina’s Economic Stakes
The stalled AESC battery factory represents a significant setback for South Carolina, which has invested heavily in its EV ecosystem. The state has a long history of attracting foreign manufacturers like BMW, Michelin, and Samsung, contributing to an economic boom over the past few decades. The Florence factory was expected to transform the Pee Dee region by creating high-skill jobs and spurring infrastructure development. The pause has put over 1,600 jobs on hold and created uncertainty for local suppliers and businesses.
South Carolina remains committed to supporting AESC, with state officials confirming that the $135 million in grants and $121 million in bonds will not be retracted due to the construction pause. The state is also banking on other EV projects, such as Volkswagen-owned Scout Motors’ $2 billion plant in Blythewood, which will employ 4,000 people and begin production in 2027. However, the uncertainty surrounding federal policies and tariffs could threaten the state’s ability to attract and retain such investments in the future.
Florence County officials are actively engaging with AESC, BMW, and state leaders to clarify the project’s timeline and support its eventual resumption. The Economic Development Partnership emphasized AESC’s commitment to the region, noting that the company’s 200+ current employees will remain employed during the pause. Local leaders are advocating for stable policies to ensure that South Carolina remains a competitive destination for advanced manufacturing.
Consumer Sentiment and Market Trends
The stalled AESC battery factory comes at a time when consumer sentiment toward EVs is mixed. A recent AAA survey found that only 16% of Americans are “very likely” to purchase an EV as their next vehicle, citing high costs for battery repairs, vehicle purchase prices, and concerns about suitability for long-distance travel. The potential elimination of the $7,500 federal tax credit for new EV purchases could further dampen demand, making it harder for manufacturers to justify large-scale investments like the Florence factory.
Despite these challenges, EVs and plug-in hybrids are gaining market share due to their rapid acceleration and lower fuel costs. South Carolina’s investment in EV manufacturing is predicated on long-term growth in consumer adoption, but the stalled AESC battery factory underscores the risks of relying on federal incentives that are subject to political shifts. For consumers considering an EV purchase, experts recommend monitoring federal and state policies, comparing models and battery warranties, and staying informed about production updates from key manufacturers.
Looking Ahead: The Future of the Stalled AESC Battery Factory
The stalled AESC battery factory is a microcosm of the challenges facing America’s clean energy transition. While AESC remains optimistic about resuming construction, the lack of a clear timeline leaves South Carolina’s EV ambitions in a state of uncertainty. The company’s decision to scale back plans for a second $1.5 billion factory in Florence earlier in 2025, which would have created an additional 1,080 jobs, further illustrates the cautious approach manufacturers are taking amid policy volatility.
For BMW, the pause necessitates a strategic pivot to ensure a stable battery supply for its Neue Klasse EVs. The company’s ability to adapt, potentially by sourcing cells from CATL or other suppliers, will be critical to maintaining its production timelines. However, the broader implications for South Carolina’s economy and the U.S. EV industry hinge on the outcome of ongoing policy debates in Washington.
As the U.S. navigates this period of transition, South Carolina’s resilience will be tested. The state’s track record of fostering a business-friendly environment has attracted significant foreign investment, but the stalled AESC battery factory serves as a reminder of the vulnerabilities inherent in global supply chains and domestic policy shifts. Florence County and the Pee Dee region must diversify their economic strategies and advocate for stable policies to safeguard their EV aspirations.
Conclusion
The stalled AESC battery factory is more than a local setback—it’s a warning sign for the U.S. EV industry. Policy uncertainty, driven by the Trump administration’s efforts to roll back clean energy incentives and impose new tariffs, has created a challenging environment for manufacturers like AESC. South Carolina, with its ambitious EV goals, finds itself at a crossroads, balancing optimism with the realities of a shifting regulatory landscape. For BMW, the pause complicates its Neue Klasse rollout, while for Florence County, it delays a transformative economic opportunity. As the nation grapples with the future of clean energy, the stalled AESC battery factory underscores the need for stable policies to sustain America’s electric vehicle revolution. Stay tuned for updates on this evolving story, as the decisions made in Washington will shape the path forward for South Carolina and beyond.