US Manufacturing Projects ‌Delayed or Stagnant Amid Inflation Reduction Act and Chip Act

In‌ August this year, the U.S. Inflation Reduction Act and the Chip Act were implemented for two years. These two‌ bills, ‍which claim to be aimed at revitalizing​ the manufacturing industry, ‍improving the clean energy industry chain, and strengthening green technology research⁢ capabilities, have been controversial ⁢and criticized since their ⁣implementation in August 2022.

40% of Large Manufacturing Projects Postponed or Cancelled

An investigation by the‍ Financial Times found that in the first year of the implementation of ‌the two bills, of⁢ the 114 clean energy, semiconductor and other manufacturing ⁤projects publicly ⁤announced by the United States with a total investment of US$227.9 billion, projects ‌worth US$84 billion were delayed, postponed or even suspended indefinitely,​ accounting for nearly 40%.

According to‌ data ‌from the Peterson Institute for International Economics, ⁢as of May this year, the United States has announced a total ‌of $382 billion in manufacturing-related investments, of which about 70% are invested in the chip industry and the rest in electric vehicles ⁢and renewable energy. However, a⁢ considerable portion of these investment plans have either been postponed or reduced in size, and some have ⁤even been completely stopped.

Electrification Transformation of the U.S. Auto Market in Reverse

The​ electrification transformation of the U.S. auto market is currently in reverse. In the United States, the government has​ relaxed the‍ average fuel economy standards for automakers, while electric vehicle sales have continued to slow, which has dragged down automakers’ profits and ⁤forced them to suspend expansion ⁣plans due to competition from similar cost-effective⁤ models.

Ford announced at the beginning of the year that it would shut down all electric⁢ vehicle production lines, reduce the size of its battery plant in Michigan, and postpone the official start of production at its electric⁣ vehicle plant in Tennessee. In July, GM postponed the construction of ⁢a ‍new plant and postponed the completion⁣ of the renovation of its electric truck plant in Michigan⁢ by six months to mid-2026, which means that‍ GM will not be able to achieve its goal of producing 1‌ million electric⁢ vehicles in North America by 2025.

Green Energy Projects Suspended to Varying Degrees

Large clean energy projects⁤ have not been spared, with flagship projects on hold including ‍Italy’s Enel’s $1 billion solar panel factory in Oklahoma, South Korea’s LG ‍Energy Solution’s $2.3 billion battery storage facility in Arizona and Albemarle Corp’s $1.3 ⁢billion lithium smelter in South Carolina.

It is worth noting‌ that in the ‌past year, several​ solar panel manufacturers, including Max-eon Solar Technologies, Heliene, and Meyer ‍Burger, have postponed their plans to build factories in the​ U.S. The $1.5 billion investment plan promised by Indian photovoltaic module ⁢manufacturer Vikram Solar’s joint venture in the U.S., VSK Energy, has entered a reassessment phase,‌ including a $250 million investment in Brighton, Colorado, creating 900 jobs, and a $1.25 billion investment in a solar panel parts factory.

Policy Fluctuations and Cost⁤ Surges are the Biggest Obstacles

The industry believes that factors such as deteriorating market conditions, slowing demand, labor shortages, and increased policy uncertainty caused by the presidential election have forced‍ companies returning to the United States to readjust their plans.

On the one⁢ hand, policy swings have hindered companies from investing in the United States. The financial support ⁤provided by the Chip Act has been slow to arrive, while the financial support ⁣terms‌ and rules of the Inflation Reduction Act are unclear and lack guidance, making it difficult for most companies⁣ to obtain approval.

On the other hand, the high raw material and ‌labor costs brought about by ‍high inflation have further increased the cost pressure of returning manufacturing to the‌ United States. John Hensley, vice president of market ⁣and policy analysis at the American Clean Power Association, said: “Not all factories, facilities, and production lines​ will be put into production. This is just ‍a healthy manifestation of competition, and personnel loss is inevitable.”

Craig McFarland, ‌mayor of‍ Casa Grande, Arizona, said: “Due to labor and⁤ supply chain reasons, spending costs are generally higher than expected, and companies are having to re-evaluate ‍their investments.”