How China bought out the US battery industry
The US should not let another wave of battery startups go bankrupt
What happens when American innovation is shipped overseas and sold back at a profit? In the first two decades of this century, China quietly acquired US battery technology and manufacturing muscle—setting the stage for today’s geopolitical and industrial battle over clean energy.
This week, I revisit two deals that reshaped the US battery sector: a factory in Florida built by GE, and a cleantech darling backed by the Obama administration. Their stories offer crucial lessons for policymakers—especially as a new wave of battery firms struggle.
First my recommended reads of the week, a new section I’m starting.
The Essential 5 – This Week in Batteries, Rare Earths & EVs
China’s Battery Exports Stay Strong
Despite the “Liberation Day” tariffs China exported 22.3 GWh of batteries in April—down just 3% from March, but up 64.2% year-over-year. Exports to Southeast Asia surged, which may suggest rerouting of supply to reach the US, according to Chinese analytics firm GGII.Lynas Achieves Rare Earth Milestone in Malaysia
Australian mining company Lynas announced a breakthrough in processing heavy rare earths at its Malaysian facility—an important step in diversifying the global supply chain away from China.Lithium Prices Keep Falling
Lithium carbonate futures on China’s Guangzhou futures exchange fell 4% Friday to RMB 61,800 ($8,575) per tonne, despite a pause in US-China trade tensions. The Australian government continues to back its lithium sector, with Wesfarmers’ Covalent joint venture among the latest to receive support.GM Unveils New Battery Tech
General Motors, in partnership with LG Energy Solution, has launched lithium manganese-rich (LMR) batteries—potentially offering longer range and lower costs for future EVs.CATL’s Domestic Market Share Dips
China’s April battery installation data shows CATL’s market share slipping below 40% for the first time since November 2023, signaling intensifying competition at home.
Florida’s Forgotton Factory: How it Started
In 2002, a Chinese state-owned conglomerate bought a battery factory in Gainesville, Florida—a site originally built by GE in 1963 and once a proud employer of over 1,000 workers.
At its peak under Energizer, the factory generated $204 million in annual revenue and even powered a world-record-breaking electric car, White Lightning, which hit 254 mph at the Bonneville Salt Flats in 1999.
But by the late 1990s, the factory—then owned by Moltech Power Systems—was struggling. The consumer electronics boom was just beginning, and Chinese firms like BYD and ATL (a predecessor to CATL) were rising fast.
Moltech filed for bankruptcy in 2001. That’s when China stepped in.
China arrives
The buyer was the Shanghai Tyre & Rubber Co. (STARC), part of the state-owned Shanghai Huayi Group. The two sides negotiated at the MGM Grand in Las Vegas—reportedly with the 14-year-old son of Moltech’s CEO serving as translator.
Martin Higgins, Moltech’s CEO, told The Times UK that his son was “studying Mandarin at school. He is very bright, a straight-A student, and I don’t speak the language. He knows enough to say ‘my dad needs a higher price’.”
STARC promised to keep jobs in Florida. But by 2006, the plant was shut down, and its battery equipment had been shipped to Shanghai.
CNN later described the abandoned site like this:
“Hanging on the walls are vestiges of the company’s former glory: 40 framed patent certificates and a photo of White Lightning… Nearly all the battery-making equipment is now in Shanghai.”
Even worse, American engineers were sent to China to train their replacements. The strategy was clear: acquire the IP, replicate production at home, and dominate the global market.
A123 Systems - A Cleantech Dreeam Undone
Taking office amid the financial crisis President Barack Obama’s Recovery Act aimed to kick start the US economy and create jobs. It also set aside money to build a clean energy economy and a US battery business.
According to the author of The New New Deal, Michael Grunwald, the act “gave clean energy the push it needed to travel from fringe to mainstream.”
Founded on MIT research, A123 Systems was one of the stars of Obama’s 2009 stimulus package. The company raised $250 million in a high-profile IPO and built what was then the largest battery plant in the US, in Livonia, Michigan.
But a technical recall proved costly, and A123 collapsed. Bloomberg’s Gabrielle Coppola has a fantastic account of the whole saga here.
Enter Wanxiang Group, a Chinese auto parts giant. It outbid rivals with a $256 million offer. Despite political objections, the US government approved the deal—with promises that production and jobs would stay in Michigan.
They didn’t.
Today, over 90% of lithium iron phosphate (LFP) batteries—A123’s specialty—are made in China. US automakers and storage developers are now scrambling for alternatives.
Three lessons for 2025
These stories are more than history—they’re a blueprint for what could happen again. Here’s what I take away:
1. China-Related Fear Isn’t Fiction
Republican resistance to Chinese involvement in Biden’s clean energy subsidies is rooted in this history. A draft bill in Congress proposes banning all tax credit recipients from working with Chinese companies, or “foreign entities of concern.”
It’s not just political theater—it’s a reaction to past mistakes.
2. The Market Is Everything
A123 failed in part because the US EV market wasn’t ready. At the time, there were only two major EVs: the Chevy Volt and Nissan Leaf. Without demand, even good tech dies. If Trump guts EV consumer tax credits, as he’s threatened, he could repeat the cycle—and hand China another win.
3. Bankruptcy Isn’t the End
Failures like A123 can still bear fruit—if the skills and technology stay domestic. Alumni of A123 now lead startups like Our Next Energy. But for these firms to thrive, the US must build and protect the market, not abandon it at the first sign of struggle.
The US should not lose the next generation of battery companies the same way it lost the last.
Back in the early 1990's me and a mate, both consumer electronic technisions, were playing with Australian made solar panels. Made by the Australian owned BP solar.
I was lucky enough to visit the experimental solar farm. The first in Australia.
By the early 2000's BP solar was owned by the Chinese and the Australian scientist who owned it were millionaires. They also traveled to China to set up the factory and experimental solar farm that we had in the Hunter valley, NSW, Australia. I believed the scientist lived in China for 20 years and loved it.
Today those scientist have returned to Australia and retired. BP solar panels are imported into Australia.
Henry , this is history that needs to be read and understood by political and business decision makers . It is excellent that you are telling this story which is so interesting and important . Thankyou .