US IRA Unlikely to Deter Firms’ Overseas Expansion: Gotion High Tech
TL/DR –
The Inflation Reduction Act (IRA) introduced in the US is unlikely to prevent companies from expanding abroad because businesses flourish through competition and not regulation or subsidies, says the chairman of Chinese battery maker Gotion High Tech. Even as the IRA, an anti-inflation measure that offers tax benefits based on US-manufactured content, has been commended for stimulating clean energy projects, it has been criticized in Asia and Europe for its protectionist approach. Li Zhen, the chairman of Gotion, expressed confidence in US firms’ continued interest in overseas expansion and reaffirmed Gotion’s commitment to globalization, with plans to construct or already built plants in the US, Germany, and Morocco.
US Inflation Law Not Stopping Firms From Expanding Abroad, Says Gotion High Tech Chairman
SHANGHAI – The U.S. Inflation Reduction Act (IRA), despite its potential impact, will not deter companies from expanding overseas, according to the Chairman of Chinese battery manufacturer, (002074.SZ). He maintained that companies grow through competition rather than by regulation or subsidies.
Introduced last year, the U.S. IRA links tax benefits to U.S-manufactured content. This legislation has been commended for propelling clean energy projects but has also ignited criticism in Asia and Europe due to its perceived protectionism.
During the Bloomberg New Economy Forum in Singapore, Li Zhen expressed his belief that U.S. companies will continue to venture abroad despite the IRA, mirroring the strategy of Gotion.
He highlighted Gotion’s commitment to globalization, pointing towards the plants they are constructing or have already established in the United States, Germany, and Morocco.
Li asserted, “The IRA policy cannot entirely prevent businesses from going global or penetrating international markets. Companies prosper through competition, not regulations or subsidies, and the market should decide the winner.”
“With the right effort and product, protectionism is a short-term obstacle. We remain very optimistic about the future,” added Li.
The IRA has sparked global EV battery makers and car manufacturers to consider the North American market for new manufacturing facilities. This move aims to diversify supply chains and capitalize on the incentives offered by the act.
While Washington has stated that ‘entities of concern’ will not receive government funds, it hasn’t defined these entities yet. When asked if Gotion, a Chinese company, would be exempt from this category, Li expressed strong confidence.
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