Electric vehicle charging Photos: AFP

Chinese battery manufacturer Gotion High-tech Co has made the largest electric vehicle (EV) battery investment in the US state of Illinois to date, showing that the world's two largest economies could find a "cushioned" area where cooperation can still work despite their geopolitical tensions, industry observers said.

Having an upper-hand edge in making power batteries and a complete EV manufacturing supply chain, Chinese companies can provide know-how for the US, helping accelerate the global transition from gasoline-fired cars to green mobility.

The observers, however, maintain concerns over the Chinese firm's potential challenges in the US amid tightening scrutiny of Chinese investment and an inadequate American supply chain in the EV battery sector, which might affect the firm's operation there.

Illinois Governor JB Pritzker and Gotion announced on Friday the company's decision to locate its $2 billion lithium battery manufacturing plant in Manteno, according to the official website of Illinois state.

The facility is expected to produce 10 gigawatt hours (GWh) of lithium-ion battery packs and 40 GWh of lithium-ion battery cells annually.

"When we come to Illinois, we are not building a new factory but are planning to reuse an existing one and bring it back to life. We believe that Gotion's battery technology will help boost e-mobility in North America and economic and trade exchanges between China and the US," said Li Zhen, chairman of Gotion High-tech.

The successful landing of Gotion in the US has much to do with the company's background with German automaker Volkswagen as its biggest shareholder, industry analysts said.

In December 2021, Volkswagen China increased its stake in Gotion to 26.47 percent, making it the largest shareholder.

"I think this background greatly differentiates Gotion from other Chinese battery makers that are not likely to make such a move in the US, as the risks are very high," Yu Qingjiao, secretary general of the Zhongguancun New Battery Technology Innovation Alliance, told the Global Times on Sunday.

This is not Gotion's first move into the US market. It previously announced a $2.4 billion project to make battery materials in Big Rapids, Michigan, starting from 2025.

"Power battery production is another example proving that the US cannot decouple from China as some US politicians have suggested. The country needs Chinese firms' know-how in this regard," Yu said.

Zhang Xiang, visiting professor at the Engineering Department of Huanghe Science and Technology University, told the Global Times on Sunday that US legislation on sourcing more materials locally, which raised costs compared with shipping from China, has slowed the pace of domestic battery firms entering the American market.

In August 2022, the Inflation Reduction Act was signed into law by Biden, requiring automakers to have 50 percent of critical minerals used in EV batteries sourced from North America or US allies by 2024, rising to 80 percent by the end of 2026.

"Under such restrictions, Gotion might face challenges from the supply chain perspective as battery production involves various raw materials and technologies, but US upstream providers are inadequate," Zhang said.