Republican lawmaker seeks details of Tesla relationship with Chinese battery maker CATL

investing.com:

By David Shepardson

WASHINGTON (Reuters) -A senior Republican in Congress asked Tesla (NASDAQ:TSLA) Tuesday to detail its relationship with Chinese battery manufacturer CATL amid concerns U.S. electric vehicle subsidies were improperly flowing to foreign entities.

The chair of the House Ways and Means Committee, Representative Jason Smith, asked Tesla CEO Elon Musk in a letter if the electric vehicle (EV) maker has contracts with CATL or is considering contracts.

Smith said the committee is concerned CATL «may be trying to negotiate other agreements like the agreement with Ford.» Reuters previously reported Tesla was CATL's biggest client.

Republicans in Congress have been probing Ford Motor (NYSE:F)'s planned $3.5 billion investment to build a battery plant in Michigan using technology from CATL, the world's largest battery maker.

The auto industry is watching how new rules around future EV tax credits will be implemented as they make investment decisions on producing batteries for their transition to EVs.

In 2022, Congress passed the $430 billion Inflation Reduction Act (IRA) which will bar future EV tax credits if any battery components are manufactured or assembled by a «foreign entity of concern.»

The foreign entity of concern rules are aimed at weaning the United States from Chinese supply chains and come into effect in 2024 for completed batteries and 2025 for critical minerals used to produce them. The question is what precisely constitutes a «foreign entity of concern», and so far no foreign battery supplier has been labeled as such.

Smith asked Musk whether, aside from boosting North American manufacturing, his company had «taken any actions to increase production of the number of vehicles that will qualify