More clean tech manufacturing investments were canceled in the U.S. in the second quarter than were announced, according to a new study from the Rhodium Group and MIT. Companies canceled $5 billion worth of projects, while only $4 billion in new investments was announced.
Actual clean tech manufacturing investments, not just announcements, declined by 15%, as well.
The pullback comes in the wake of the GOP’s reconciliation bill, which erased key portions of the Inflation Reduction Act, a piece of legislation that spurred a tidal wave of manufacturing investments in the United States. Last quarter’s cancellations are second only to Q1 of this year, in which $7 billion worth of investments were canceled.
The latest projects to get the ax were predominately battery factories, the report said. The industry has encountered new headwinds as the One Big Beautiful Bill pulled key supports for many of the projects by softening rising demand for electric vehicles and eliminating production tax credits.
Cancellations in the first quarter were largely centered around EV production, while battery manufacturing was responsible for the majority of those in the second quarter. Still, battery manufacturing remains a key driver of new investments, hitting $8 billion in the second quarter.
The pullback mirrors a broader retrenchment in manufacturing investments across the American economy, according to data from the U.S. Bureau of Economic Analysis. Spending on new factory buildings was down about a quarter percent in both Q1 and Q2, the first period of consecutive declines since 2020.
Just two years ago, about a year after the passage of the Inflation Reduction Act, the story was very different. Investments in new manufacturing structures hit 2.22%, the biggest change in new investments since 1978.
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The news comes as the U.S. economy grew faster than anticipated in Q2, with gross domestic product rising 3.3%, up from the 3% that the Bureau of Economic Analysis initially reported. Still, if manufacturing investment continues to decline, the economy’s long-term strength might be hollower than it seems.