Pelosi Trip Delays Tesla Supplier CATL’s North American Plant Announcement

CATL did not respond to a request for comment.

Ms. Pelosi’s trip to the self-governing island that China claims as her own, and China’s anger over her visit, is likely to exacerbate US-China tensions as bilateral business ties are already at low levels. The US in recent years has imposed sanctions against Chinese technology companies, while in China nationalism is growing among its consumers.

CATL — based in the coastal southeastern city of Ningde, about 137 miles across the sea from Taipei — has long had ambitions to make electric car batteries in the U.S., the people said. It has weighed plans to invest up to several billion dollars in a new electric car battery factory in North America, they said.

The battery maker is looking at locations such as Kentucky and South Carolina, where automakers such as Ford Motor Co.

and Bayerische Motoren Werke AG operate factories, the people said. But because of rising tensions between the U.S. and China in recent years, as well as a lack of skilled and relatively cheap labor, it had not chosen those locations, they said.

Earlier this year, CATL began weighing options in Mexico. Currently, the most likely candidates are Ciudad Juárez, a Mexican city bordering Texas — Tesla has a factory in Texas — and Saltillo, an auto manufacturing center in northern Mexico, the people said. Another possibility for CATL is to build some smaller assembly and storage facilities in the U.S. alongside a battery manufacturing plant in Mexico, the people said.

The company is unlikely to announce the plant before the end of September, although the timeline could change, one of the people said. Ford said last month that CATL would supply batteries for its plug-in hybrid vehicles in North America.

Bloomberg earlier reported on CATL’s decision to delay the plant announcement.

During Ms. Pelosi’s 19-hour stay in Taipei, her business exchanges focused on chips and a Taiwanese semiconductor company building a plant in Arizona, reflecting recent U.S. efforts to secure its own high-tech technology and disrupt the U.S. China from developing similar advanced chips.

On Wednesday, Ms. Pelosi met with executives from Taiwan Semiconductor Manufacturing Co.

, the world’s largest chip contract manufacturer. They discussed implementation of the recent $280 billion bill passed by US lawmakers aimed at boosting US semiconductor manufacturing and competitiveness with China, according to people familiar with the matter.

At a hotel in Taipei, Ms. Pelosi lunched with executives from TSMC and another local manufacturer, Pegatron Corp.

major supplier of Apple Inc.,

and discussed economic issues and supply chain cooperation, according to a social media post by Taiwan President Tsai Ing-wen.

A TSMC spokesman declined to comment on the meeting. A Pegatron spokeswoman said the vice president spoke to her about the role of technology amid the pandemic.

The US bill offers incentives to chipmakers to build facilities in the US, while also requiring them not to invest in more advanced chip production in China. TSMC is among the likely major beneficiaries of the account. It currently produces most of its advanced chips at its facilities in Taiwan and has chip manufacturing facilities in China.

Ms. Pelosi’s meeting with TSMC executives underscores the world’s precarious dependence on the island’s pioneering semiconductor industry. Almost all of the world’s most advanced chips, used in billions of electronic products, including smartphones, personal computers and cars, are made by TSMC in Taiwan.

President Tsai strengthened Taiwan’s business ties with the US in a meeting with Ms Pelosi on Wednesday, saying: “We will make Taiwan a key stabilizing force for regional security, ensuring a free and open Pacific as well as steady development of global trade and supply chain”.

The fallout from the visit included China cutting some trade ties with Taiwan. China is Taiwan’s largest trading partner: Taiwan sold $126 billion in goods and services to China last year and imported $82 billion, according to Taiwan’s Ministry of Finance. Beijing is expected to use its economic and trade power to pressure Taiwan and voice its displeasure over Ms Pelosi’s trip.

China’s Ministry of Commerce announced on Wednesday that it will suspend exports of natural sand to Taiwan. The suspension was made based on relevant laws and regulations, the ministry said. He did not say how long the suspension would last.

Imports of natural sand from China in the past two years accounted for less than 1% of the sand and gravel used by Taiwan, Taiwan’s Ministry of Finance he said in a statement Wednesday.

Also on Wednesday, China suspended shipments of certain fruits and fish from Taiwan based on food safety requirements and standards, China’s customs said. Food imports suspended include grapefruit, lemons, oranges and other citrus fruits, as well as frozen white hairtail and frozen saffron from Taiwan.

Earlier this week, China temporarily suspended imports of thousands of Taiwanese food products, including fish, tea and honey.

—Joyu Wang contributed to this article.

Write to Raffaele Huang at raffaele.huang@wsj.com