$84 billion worth of Biden-subsidized manufacturing projects are failing

President Joe Biden's flagship industrial and climate initiative has struggled to get off the ground as $84 billion worth of White House-backed projects are stalled or delayed, a Financial Times investigation found on Monday.

Of the nearly $228 billion in manufacturing projects worth more than $100 million that are subsidized by the Inflation Reduction Act (IRA) and the President's Science and Chip Act, about 40 percent, by a total of $84 billion, are paused or delayed. informed. The setbacks raise questions about the viability of Biden's efforts to create a green energy manufacturing supply chain in the U.S. as falling demand for electric vehicles (EVs), lingering inflation, interest rates high and Chinese competition continues to haunt domestic manufacturers, according to FT.

“There will be attrition,” John Hensley, vice president of markets and policy analysis at American Clean Power, told the FT. “Not all of these facilities will connect.”

About 40 percent of the largest U.S. manufacturing investments announced in the first year of Biden's signature overhaul of industrial and climate policy have been delayed or halted, by @FT. Of the projects worth more than $100 million, a total of $84 million have been delayed or stopped indefinitelyhttps://t.co/uQ6IloeUZF

— annmarie hordern (@annmarie) August 12, 2024

Slowing US demand for electric vehicles has contributed to the manufacturing freeze, with Korean auto parts maker Samkee delaying its electric vehicle lines in Alabama by one to two years, it reported the FT. Electric vehicle market share plummeted in the first quarter of 2024, with the average selling price of electric vehicles falling 3.6% year over year to $44,186 in March as dealers looked to download inventory

A difficult macroeconomic context has also contributed to the delays, according to the FT. High interest rates have pushed up the cost of borrowing for businesses as the Fed continues to hold its target range for the federal funds rate at 5.25% to 5.5%, a 22-year high. july 2023.

Added to the tension of the incipient projects is inflation, with higher prices 20% since Biden became president in January 2021.

“Everybody is experiencing higher costs than expected just because of labor and the supply chain,” Craig MacFarland, the mayor of Casa Grande, Arizona, told the FT.

Chinese competition has also caused problems for Biden's flagship manufacturing initiative, as China's superiority in establishing solar supply chains combined with its government's heavy subsidy of raw polysilicon means that difficult for American companies to compete, even with tariffs and subsidies supported by Biden.

The Inflation Reduction Act of 2022 and the Chips and Science Act provided more than $400 billion in tax credits, loans and grants to manufacturers, in a White House effort to spark domestic green energy technology and semiconductor production.

“Of course, we want to see these projects up and moving as quickly as possible,” Alex Jacquez, special assistant to the president for economic development and industrial strategy, told the FT. “We continue to work to remove barriers related to permitting, funding, where they exist.”

The White House did not immediately respond to a request for comment.

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