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China To Scrutinise Ford's Electric Vehicle Battery Plant Deal With CATL

China To Scrutinise Ford’s Electric Vehicle Battery Plant Deal With CATL

Not all is smooth with Ford’s plan to build a battery plant that operates with technology and support CATL. China will scrutinise Ford Motor Company’s latest deal with the battery giant to ensure the CATL’s core technology is not shared with the U.S. automaker.


The US automaker will be contracting the battery know-how from China’s Contemporary Amperex Technology (CATL), which will help set up the plant and have staff there. Ford said it will own and operate the factory and set up a wholly-owned subsidiary to run it. CATL is the world’s largest EV battery maker.

Lisa Drake, Ford’s Vice-President of EV industrialisation told the media, “Ford has control — control over the manufacturing, control over the production, control over the workforce. We’re licencing that technology from CATL.” She added some CATL staff based in Michigan permanently will help with the installation of factory equipment to build the batteries because Ford needs their help. 

CATL is providing the technology for lithium iron phosphate batteries, which are less expensive and will make Ford’s EV lineup more affordable, Drake said. The plant will be the first in the US to produce lithium iron phosphate (LFP) batteries. 

Ford’s EV lineup contributed to lacklustre earnings last year that likely will lead to expanded job cuts. It believes the batteries produced at the factory will quality for full production tax credits under the Inflation Reduction Act passed by Congress last year that seeks to encourage domestic production of EVs and batteries.

However, Beijing is concerned the Detroit carmaker could gain access to the competitive aspects of CATL’s technology, but the scrutiny is unlikely to result in the agreement being blocked, people familiar with the matter disclosed. Senior Chinese leaders asked for the extra scrutiny given the sensitivity of the deal and the current state of tensions between Washington and Beijing, a report claimed.

“We are not aware of any outreach by Chinese government officials on this matter,” a Ford spokeswoman said.

CATL could not be reached outside market hours. Ford announced plans to invest US$3.5 billion to build an electric vehicle battery plant in Michigan, with help from CATL’s technology.

Under the deal, CATL will license the technology and technical assistance needed for Ford to produce LFP batteries in Michigan. Senator Marco Rubio reportedly asked the Biden administration to review Ford’s deal to use technology from Chinese battery company CATL as part of the automaker’s plan to spend US$3.5 billion to build a battery plant in Michigan.

A spokeswoman for Democratic Senator Joe Manchin said Manchin “has been clear about his grave concerns about vehicle supply chain reliance on China. Ford has serious questions to answer before Senator Manchin can fully evaluate the business partnership.”

 

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