Aspen Aerogels, which conditionally received a large Department of Energy loan in October, is canceling its planned manufacturing facility in Statesboro, Georgia. The company makes thermal barriers for electric vehicle batteries, including for General Motors.
The conditional commitment from DOE’s Loan Program’s Office was for $670 million, dedicated specifically to the Georgia plant. In its February earnings call, however, the company told investors it had withdrawn from the negotiation process for the loan. Instead, the company will focus on expanding its production elsewhere, including at an existing factory in Rhode Island — as well as in China and Mexico.
In China, Aspen is planning to increase annual production capacity by $200 million by 2026. The company’s manufacturing partnerships in China have already proven effective in delivering products for other business arms, and are “capable of delivering increased aerogel production capacity” to help make up for the loss of the plant in Georgia, CFO Ricardo Rodriguez said. There are “literally no limits” to how much Aspen can increase capacity there, he added.
(The earnings call came after the Trump administration’s first 10% tariff increase on China, but before the second, which took effect just last week.)
And OEM customers aren’t worried about the strategic shift, according to Rodriguez: “They don’t care where it’s made,” he said. To qualify for various tax credits under the Inflation Reduction Act, EV batteries must meet a threshold of components manufactured in the United States — though the fate of those tax credits remains in flux.
In February, Aspen officially opened two assembly plants outside of Monterrey, in Mexico, one to start the process of creating aerogel rolls, and the second to complete assembly of the thermal barrier. Those factories, Aspen said in its note to investors, are currently owned and managed by a consulting company, but Aspen has notified that company of its intent to purchase the “automated fabrication facility.”
This comes as the Trump administration pushes to cut taxes on domestic manufacturing and levy steep tariffs against competing products, including from China and Mexico. In late January, the president addressed the World Economic Forum, telling delegates that under his second administration, there would be “no better place on Earth to create jobs, build factories, or grow a company” than the United States.
However, the reality of the administration’s first few months has been an environment of regulatory uncertainty, especially for the clean energy industry, that has made it hard to do business. That said, Aspen Aerogels did not cite political factors among its reasons for the Georgia project cancellation; the company declined to provide additional comment to Latitude Media on its decision.
The cost-cutting priority of Aspen
Thanks in part to the cancellation of the Georgia plant, and the “reduction of various positions” in the last quarter, Aspen is aiming to reduce its fixed costs by over $35 million per year, the company said. Nixing the DOE debt from the balance sheet is a big plus, Rodriguez said.
“It feels great to not take on an incremental $671 million of debt on the balance sheet and to still be able to fulfill all the expected demand,” he said.
Working with external manufacturing — including those in China — has allowed Aspen to “pick up a couple of points of margin” in its other business areas, Rodriguez added, and doing so for the EV thermal barrier business “really is a no-brainer.”
Canceling a project that was already underway, however, comes with costs of its own.
As of the end of 2024, Aspen had paid around $323.6 million for engineering, design, and construction costs for the Georgia facility. Some of the factory’s assets will be moved to Rhode Island to increase that facility’s throughput, Rodriguez said. There’s also the potential, he said, to send some of the equipment “to the external manufacturing facility as well, which we’ll be evaluating.”
That project was expected to come online in 2027, and was originally designed to supply thermal barriers for more than 200 million EV batteries each year. The project would have created more than 500 construction jobs and 255 full-time operations jobs — right in one of the swing states that clinched Trump’s election victory.
The Trump wild card
Despite Trump’s enthusiasm for domestic manufacturing, his policies since taking office are at times at odds with the goal of onshoring.
For instance, the IRA and the lucrative tax credits it offers, like 45X, has lured more clean energy manufacturing to the U.S. However, Trump paused funding disbursements related to the law, and GOP lawmakers have said they plan to take a scalpel to the law. (That said, 21 House Republicans today issued a letter in support of clean energy tax credits contained within the IRA, and warned that they may vote against the budget bill if they’re cut.)
The Trump administration has also discouraged EV adoption, including through halting a $5-billion federal EV charger program. Rodriguez told investors that Aspen is concerned about the relatively slow rate of EV adoption in the U.S., and its implications for the company.
“China is at 50% EV penetration already. In North America and Europe, we continue to dabble in this 10% to 15% level,” he said. “So you do start wondering, is that progress?”
Most of Aspen’s thermal barrier customers are global OEMs, who Rodriguez said are mostly “staying the course” regardless of the Trump administration’s policies — but are also staying cautious about how they deploy capital during his second term in office.
The long view, however, is more positive: “Four years within a 20-year transition of electrification is not a ton,” Rodriguez said.
Aspen Aerogels is at least the second loan recipient to walk back its domestic manufacturing plans. In January, Kore Power, which had received a conditional commitment for an $850 million loan from LPO, scrapped plans to build a battery manufacturing plant in Buckeye, Arizona.
In Kore Power’s case, the company told Latitude Media that it still plans to make its batteries domestically, but will do it faster and more cheaply via a retrofit, rather than building its planned greenfield plant.
