Updated with additional information.

CLARKSVILLE, TN (CLARKSVILLE NOW) – Three years after announcing it would bring an EV battery plant to Clarksville with almost 300 jobs, Microvast this week terminated several employees as part of a reduction in force.

While no WARN notice was filed with the State of Tennessee as of Wednesday, a former employee told Clarksville Now that a large number of employees at the plant had been laid off. The termination letter from Microvast, shared with Clarksville Now, states that the employees were being “terminated due to a reduction in force,” effective immediately on April 19.

In a memo to employees, CEO Yang Wu said, in part, “Microvast – like other companies across different industries and geographies – is going through economic ups and downs in line with current difficult market conditions. Although we feel confident and excited about the future of our U.S. operations, we need to make difficult decisions now to put us in a position to fully realize our potential. We currently are devoting our efforts to reducing our costs and obtaining new financing. The expense reduction will involve workforce adjustments and other cost-saving strategies.”

Clarksville Now has reached out to Microvast for comment.

Search for financing

That struggle to obtain financing to finish the Clarksville plant was a key takeaway from Microvast’s Q4 earnings call on April 1.

“The challenging financing environment means that for the time being, we have got Clarksville as far as we can on our own balance sheet,” Yang Wu said. “Accordingly, we are not currently anticipating material production volumes or revenues from our Clarksville facility. … Once we are able to secure financing, our current estimate is that an additional six to eight months is needed to bring Clarksville Phase 1A (online).”

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The plant had been scheduled to open in the fourth quarter of 2023.

During the call, then-Chief Financial Officer Craig Webster said the Clarksville plant is about halfway there, and another $150 million is needed to finish it.

On April 10, Webster stepped down as CFO, and he will move to an advisory role for the coming year, according to SEC filings.

Clawback provisions for tax incentives

Microvast is building on the former Akebono site, which it purchased and is in the company’s private hands, according to Josh Ward, vice president of industrial development with the Clarksville-Montgomery County Economic Development Council

The company did get local and state of Tennessee tax incentives to open the plant. In exchange, they are required to have 80% of the 287 promised jobs filled (230 jobs) by the end of 2025, or those local PILOT incentives will be terminated, Ward told Clarksville Now. The state clawback provisions are similar.

Ward said the company essentially hired for the plant opening too early, and they expect to fill those jobs again once they’re ready to open the plant.

“We’re disappointed that they didn’t get the funding to build the plant earlier,” Ward said. “We just want people to know their taxpayer dollars are protected.”

Microvast anticipates that there will be a demand for Clarksville production in 2025.

Struggles to open US plants

Microvast has had several struggles since it announced the Clarksville plant in February 2021. The company had planned a polyaramid separator manufacturing plant in Hopkinsville, Kentucky. But that was canceled in June 2023 after Kentucky officials said they wouldn’t pay a promised $21 million in economic incentives, according to the Associated Press.

Kentucky officials backed out because the U.S. Department of Energy abruptly rejected a $200 million loan for the project after some congressional Republicans argued the firm has improper ties to China. The company has denied claims of inappropriate Chinese influence, the AP said.

In October 2022, Microvast announced it would open a second plant in Clarksville using a $200 million federal grant. That plant was to employ an additional 700 to 800 jobs. But in February 2023, company officials backed out without explanation, saying they would build only the one Clarksville plant.

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