This week Foxconn, a Taiwanese company under the influence of China, injected another $170 million in Lordstown Motors, the Ohio electric truck company. This follows Foxconn’s purchase of Lordstown’s plant and $50 million worth of stock in November 2021.
Although America has achieved independence in oil and gas production, China is actively attempting to steer America in the direction of greater dependence on battery-powered vehicles. A new Congress should consider whether this makes sense.
Lordstown Motors was in great financial difficulties in 2021 and might have gone under, but Foxconn bailed it out. Although the new funding is dependent on approval from the U.S. Treasury’s Committee on Foreign Investment in the U.S. (CFIUS), it’s likely that the Chinese government will be permitted its expanded stake in Lordstown Motors.
The Foxconn investment and other electrification projects make the United States more reliant on China. It's to China’s advantage to prop up America’s battery electric vehicle companies, because China makes the batteries. The greater the number of battery-powered buses, trucks, and cars in the United States, the more batteries China can sell.
China has purchased other U.S. electric vehicle and electric battery companies. The Chinese company BYD won a contract in 2018 to sell electric buses to the State of Georgia. Smith Electric partnered with Wanziang to make electric vehicles.
America is walking into a problem of dependence in its vital transportation sector, just as Europe walked into a problem of dependence on Russia.
Chinese companies can list on American stock exchanges, raising capital in America for Chinese companies. But American companies do not list on Chinese stock exchanges. Li Auto, a Chinese hybrid auto company, went public on NASDAQ last year, and it aims to sell hybrids in the American market.
Consider that our laws allow Chinese companies to buy 100 percent of American companies, but American companies often cannot buy 100 percent of Chinese companies. The government of China keeps a stake in Chinese companies purchased by American companies.
Teens are switching from Facebook and Instagram to Tik Tok, the Chinese social media darling. But Gmail and many other American social media apps are prohibited in China. China’s algorithms can be used to influence and track our teens, but Chinese teens cannot access our platforms.
China sets up Confucius Centers at American universities to teach American students the advantages of the Chinese Communist Party. Yet China would not allow Federalist Societies, or Adam Smith Societies, to be set up in Chinese universities.
Current energy policies weaken rather than strengthen America. Through federal and state targets for renewable energy and battery-powered electric vehicles, America is becoming more dependent on China—a country that is not friendly to us.
What to do?
Either America has to accept dependence on China, and live in a constrained way, or it needs to forcibly disconnect with China, and abandon mandates for battery-powered electric vehicles, wind turbines, and solar panels. America gradually needs to incur the costs of shifting overseas manufacturing elsewhere.
The next Congress needs to consider the ramifications of both options. Because the second one is difficult, the temptation will be to keep the status quo and accept the first option by default. This would be a serious mistake. It’s time to stop giving China leverage over the United States.
This piece originally appeared in Forbes https://www.forbes.com/sites/dianafurchtgott-roth/2022/11/08/chinas-cash-drives-america-towards-electrification/?sh=29757de02bd5