Ford to Use Chinese Battery Tech in Drive for Cheap BEVs

Paul Myles

TU-Editor

---

14th February 2023

Ford is ignoring current US-China tensions by announcing a deal with CATL to supply its automotive battery technology to its $3.5Bn to build battery plant in Michigan.

The deal side-steps the ownership restrictions of the Inflation Reduction Act by creating a plant that will be wholly owned by the US automaker with no involvement from China’s CATL supplier beyond its exclusive use of that company’s technology. Reuters reports that industry workers see this as a gamble by Ford that making the batteries in the US will help it and Chinese partner attract domestic consumers to embrace a lower-cost BEVs pioneered in China.

Ford’s plan to build the battery plant near Marshall, Michigan, is said to be a judgment that lower cost and faster recharging will attract many customers, including commercial fleet buyers, to accept the limitations of lithium-iron-phosphate, or LFP batteries. The automaker is also counting on its decision to manufacture LFP batteries in the US at the wholly owned plant to take the political risk out of relying on a Chinese tech partner.

Building LFP batteries domestically also gives Ford a shot at significant US battery manufacturing subsidies provided for under IRA that could help it hit a goal of 8% profit margins on its EV operations by 2026. The Marshall plant is scheduled to launch with 35 gigawatt-hours of capacity, enough for 400,000 BEVs a year, and production should start in 2026. It is one of four battery plants Ford has announced plans to build in North America and Europe.

Michigan approved just over $1Bn in incentives over 15 years to win the project including “Critical Industry Program” grants of up to $210M and $772M to designate the project as a “Renaissance Zone” that will significantly reduce both real and personal property taxes. Ford has also agreed to recognize the United Auto Workers (UAW) at the plant if a majority of workers sign cards, the automaker and union said. Under the “card check” process, a majority of hourly workers could simply sign cards supporting the union and, once certified, an election would not be necessary. Ford Chairman Bill Ford said: “Manufacturing in America will bring us closer to battery independence.”

— Paul Myles is a seasoned automotive journalist based in Europe. Follow him on Twitter @Paulmyles_