More clean tech manufacturing projects were canceled in the U.S. during the second quarter than were announced, according to a joint study by the Rhodium Group and MIT. Companies scrapped $5 billion worth of projects, while just $4 billion in new investments were announced.
Actual investments, not just announcements, also fell, dropping 15% compared to the previous quarter.
The decline follows the GOP’s reconciliation bill, which rolled back major provisions of the Inflation Reduction Act (IRA). The IRA initially sparked a surge in clean tech manufacturing, but recent policy changes have undercut demand and key tax incentives.
Battery production was the hardest hit in Q2, with multiple factory projects canceled. Earlier in the year, cancellations centered more on EV production. Still, despite the pullback, battery manufacturing remains a critical driver of new activity, attracting $8 billion in investments last quarter.
This slowdown mirrors a wider downturn in U.S. manufacturing investment. Data from the Bureau of Economic Analysis shows spending on new factory construction fell about 0.25% in both Q1 and Q2, the first consecutive declines since 2020.
Just two years ago, the picture looked very different. In the year following the IRA’s passage, investments in new manufacturing structures surged 2.22%, marking the largest jump since 1978.
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The broader U.S. economy, meanwhile, continues to show resilience. GDP grew 3.3% in Q2, higher than the initially reported 3%. But analysts warn that if manufacturing investment keeps shrinking, the long-term outlook may prove weaker than headline growth suggests.
