Ford Motor Plans To Build EV Battery Plant In Michigan With Chinese Partner

According to people familiar with the matter, Ford Motor Co and Contemporary Amperex Technology Co Ltd plan to build a battery plant in Michigan, capping a months-long search that became mired in geopolitical tensions between the US and China. According to the people who asked not to be identified because the plans aren't yet public, the multibillion-dollar facility, which will be located about 100 miles west of Detroit, is expected to create about 2,500 jobs. According to them, the agreement could be announced as soon as next week.

Despite uncertainty about how the US Treasury Department will interpret requirements in President Joe Biden's signature climate package, the Inflation Reduction Act, Ford is moving forward with the project. The law is intended to deny consumer tax credits for electric vehicles (EVs) that use a certain amount of China-related materials in their batteries. “We’ve said that we’re exploring batteries based on CATL’s technology for Ford vehicles and that we plan to localise” production in North America, Ford said in an emailed statement. The company didn’t specify whether it had picked a location or determined other details of the project’s scope. CATL did not respond immediately to an emailed request for comment sent after business hours in China.

Ford shares fell 5.6% to close at $12.73 in New York on Friday. This year, they are up 9.5%. According to Bloomberg, the US automaker and China's CATL, the world's largest maker of electric vehicle batteries, have been discussing a novel ownership structure in which Ford would own 100% of the plant, including the building and infrastructure. According to people familiar with the situation, Ford employees would build the batteries, while CATL would own the technology to create the cells. A similar arrangement could qualify the facility for lucrative production tax credits under the Inflation Reduction Act while requiring no direct financial investment from CATL.

According to people familiar with the situation, the new factory's location near the small town of Marshall in southwestern Michigan has room to expand, potentially bringing more jobs and a larger investment. According to Bloomberg, the companies also considered Virginia as a possible location for the plant. Virginia Governor Glenn Youngkin, a potential Republican presidential candidate in 2024, pulled his state out of the competition, calling CATL a "Trojan horse" for China that would undercut policy efforts to strengthen the US auto industry. Youngkin's press secretary, Macaulay Porter.

Michigan Governor Gretchen Whitmer has taken a different stance than her counterpart, calling Youngkin's decision "political determination," according to the Detroit News. Whitmer has been fighting to attract more EV battery investment after losing out on Ford's historic US$11.4 billion Blue Oval City investment in 2021 to Tennessee and Kentucky. Ford announced in July that it will begin using CATL's less expensive lithium iron phosphate battery packs on its Mustang Mach-E models this year and F-150 Lightning pickups in early 2024, increasing the output of those popular vehicles. Ford has stated that it intends to source 40 gigatonnes of those batteries in North America annually by 2026, but will initially import them from China.

Ford is investing US$50 billion in the development and production of electric vehicles, with a goal of producing two million per year by the end of 2026. Last year, the Dearborn, Michigan-based automaker was the No. 2 seller of EVs in the US, trailing Tesla Inc, which controls nearly two-thirds of the American market.