Senior Chinese officials are worried Ford could benefit unfairly from CATL's expertise.
Ford's recently announced deal with China's Contemporary Amperex Technology Limited (CATL) to build a $3.5 billion battery plant in Michigan has concerned upper factions of the Chinese government, as it's felt that the Blue Oval could unfairly benefit from access to CATL's industry-leading technologies.
The extent of Ford's deal with CATL is said to be under current analysis by senior Chinese leaders, based on a report by Bloomberg. The new factory - set to begin production of lithium-ion phosphate (LFP) batteries in 2026 - will be called Blue Oval Battery Park Michigan. The plant will become the first in the USA to produce LFP batteries, giving Ford a significant edge over the competition.
But ongoing tensions between Washington and Beijing are said to have resulted in worries about Ford's deal with CATL, which is why it is now being more closely evaluated over a period that hasn't been disclosed.
The deal with CATL comes at a time when the United States is doing whatever it can to cut reliance on China for the manufacturing of EVs. Most importantly, that includes a stipulation as part of the new Inflation Reduction Act that an EV should be manufactured in the USA to qualify for tax credits and that EVs should contain a limited number of Chinese-linked parts. In that light, it can be viewed as somewhat ironic that Ford is turning to CATL for help with the new factory and battery production.
There are obvious advantages to the new factory and LFP batteries for consumers, who will benefit from quicker EV production output and lower prices. An unnamed source referenced by Bloomberg did say that although Chinese officials are concerned, the chances of it stopping the Ford-CATL deal from going ahead are slim.
Ford doesn't seem overly concerned, with the automaker saying in an emailed statement, "we are not aware of any outreach by Chinese government officials on this matter."
But it's not only China that is concerned about the new deal, with some in the United States expressing disdain for it. Senator Marco Rubio of Florida requested that the Biden administration review the agreement more closely. "I am alarmed at Ford's plan to establish a large, Michigan-based factory, structured as a wholly owned subsidiary that licenses its technology from CATL," said Rubio in a letter on his website to key stakeholders, saying that "no federal funds [should] enrich PRC national champion CATL, or any other Beijing-supported company, directly or indirectly."
Virginia's governor, Glenn Youngkin, previously rejected a proposal for the Ford-CATL factory to be based in Pittsylvania County. He was equally perturbed about the China connection, much like Rubio. This rejection came even though it would've created thousands of jobs in that state.
Both the Ford F-150 Lightning and Mustang Mach-E are in line to get new LFP batteries. Based on the popularity of these models alone, it would be a blow to Ford if the CATL deal was to be halted in any way, but we'll only know for sure if this will happen in the months and weeks ahead.
Join The Discussion