US Republicans push for security review of China-linked battery company

WASHINGTON (Reuters) – Republican lawmakers on Wednesday urged the U.S. Treasury Department to conduct a security review over China-linked ownership of Gotion Inc, which plans to build electric vehicle battery plants in Michigan and Illinois, arguing its management is under Beijing’s sway.

The move is the latest push by Republicans to question Chinese-linked EV battery producers looking to set up shop in the U.S., possibly with access to taxpayer funding.

The governors of Michigan and Illinois have announced plans for Gotion to open EV plants in their states, facilities expected to create thousands of jobs.

Republican Senator Marco Rubio and Republican representatives from the states sent a letter to Treasury Secretary Janet Yellen, urging the Committee on Foreign Investment in the United States (CFIUS) to review Gotion’s ties to China’s Communist Party.

The lawmakers said that despite Germany’s Volkswagen AG (OTC:) being the largest single shareholder at about 30% of Gotion’s parent company, Gotion High-Tech , China maintained “effective control” through multiple individual shareholders.

Those include the company’s founder Li Zhen and his son whom, they said, were members of CCP organizations. Most of Gotion High-Tech’s other top shareholders, they wrote, were owned by Chinese government-linked entities, and its bylaws vow to implement the major strategic decisions of the party.

That should trigger the review, and if necessary, Gotion High-Tech’s divestment, the lawmakers said, especially since President Joe Biden has identified electric vehicles and batteries as critical parts of transportation infrastructure.

“It is not in the interest of the United States to allow the CCP to control facilities estimated to produce thousands of those batteries, much less to provide it with hundreds of millions of dollars in taxpayer funded subsidies to do so,” they said.

The Treasury Department, Gotion and Gotion High-Tech did not respond immediately to requests for comment.

China has moved in recent years to enhance the CCP’s influence in Chinese companies, where maintaining a party unit is often required under law.

Republicans also have asked Tesla (NASDAQ:) to detail its relationship with Chinese battery manufacturer CATL amid concerns U.S. electric vehicle subsidies were improperly flowing to foreign entities, and have been probing Ford Motor (NYSE:)’s planned $3.5 billion investment to build a battery plant in Michigan using technology from CATL.