Tuesday, July 16, 2024

China’s Gotion High Tech: US IRA unlikely to deter firms from going abroad

SHANGHAI, Nov 10 (Reuters) – Measures such as the U.S. Inflation Reduction Act are unlikely to stop firms from going abroad, as companies thrive through competition and not through regulation or subsidies, the chairman of Chinese battery maker Gotion High Tech (002074.SZ) said.

The U.S. IRA, introduced last year, is a massive anti-inflation measure that makes tax breaks conditional on U.S-manufactured content. It has been praised for spurring clean energy projects but also criticized in Asia and Europe for its protectionist tendencies.

Li Zhen, speaking at the Bloomberg New Economy Forum in Singapore on Friday, said he believed U.S. firms would still be committed to going abroad despite the IRA, as was Gotion.

The battery maker was committed to globalization with plants it is planning on constructing or had already constructed in the United States, Germany and Morocco, Li said.

“I don’t think the IRA policy can completely stop companies from going global or to the international market, because companies thrive through competition, not through regulations or subsidies, we have the market to decide on the winner,” he said.

“In the future we still are very optimistic, if you can put enough effort, if you have the right product, this kind of protectionism is short term.”

The IRA has prompted global EV battery makers and automakers to eye the North American market for new manufacturing plants as they look to diversify supply chains and attract the act’s incentives.

Washington has said foreign entities of concern will not be able to receive any government funds, but has yet to define what these entities are. Asked if he was confident that Gotion, as a Chinese company, would escape that definition, Li said he was “very confident”.

Reporting by Brenda Goh
Editing by Shri Navaratnam and Lincoln Feast.

Our Standards: The Thomson Reuters Trust Principles.

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