The department had been in talks with Microvast over a grant of US$200 million from the US$1 trillion 2021 bipartisan infrastructure law for developing domestic manufacturing bases and supply chains.

Last December, two Republican lawmakers criticised the decision to grant the funding in a letter to Energy Secretary Jennifer Granholm saying Microvast had ties to the Chinese government.

The source declined to say whether the decision to cancel the negotiations had anything to do with concerns about China ties. Contract decisions are made on factors including a company’s past performance, financial management and accounting systems, the source said.

The Department of Energy has “a rigorous review process prior to the release of any awarded funds, and it is not uncommon for entities selected to participate in award negotiations … to not ultimately receive an award,” a spokesman said.

Microvast did not immediately respond to a request for comment.

The grant had been set to support work by General Motors and Microvast on developing specialised EV battery separator technology and building a new separator plant in the US, work that had been expected to create hundreds of new jobs.

GM did not immediately respond to a request for comment.

Senator John Barrasso, the top Republican on the Senate energy committee, had written a separate letter to Granholm saying that Microvast was “joined at the hip with China” and that the award was antithetical to the intent of the infrastructure law.