Ford Motor Co and China-based CATL — the world’s biggest electric vehicle battery maker — are reportedly planning to build an EV battery plant in Michigan, capping a months-long search that became mired in tensions between the US and China.
The multi-billion-dollar facility, to be located about 160 kilometres west of Detroit, is expected to create about 2,500 jobs, according to people familiar with the matter. The agreement could be announced as soon as next week, they said.
Ford is moving ahead with the project despite uncertainty over how the US Treasury Department will interpret requirements in President Joe Biden’s signature climate package, the Inflation Reduction Act. The law is designed to withhold consumer tax credits for EVs made with a certain amount of China-linked 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 did not specify whether it had picked a location or determined other details of the project’s scope.
CATL (Contemporary Amperex Technology Co Ltd) did not immediately respond to an emailed request for comment outside business hours in China.
The US carmaker and CATL have been weighing a novel ownership structure under which Ford would own 100% of the plant, including the building and the infrastructure, Bloomberg reported last year. Ford workers would build the batteries, while CATL owns the technology to create the cells.
Such an arrangement may allow the factory to qualify for lucrative production tax credits under the Inflation Reduction Act while requiring no direct financial investment from CATL.
The site for the new factory, near the small town of Marshall in southwestern Michigan, has room to grow, potentially bringing more jobs and a larger investment, according to the sources.
The companies also considered Virginia as a possible home for the plant. That option was axed when Virginia Governor Glenn Youngkin, a potential Republican contender for the White House in 2024, pulled his state out of the competition, calling CATL a “Trojan horse” for China that would undermine policy efforts to strengthen the US auto industry.
Michigan Governor Gretchen Whitmer has staked out a different position, calling Youngkin’s move “a political determination”, the Detroit News reported last month. Whitmer has been fighting to attract more EV battery investment after losing out to Tennessee and Kentucky on Ford’s historic $11.4-billion Blue Oval City investment in 2021.
Ford announced in July it will begin using less expensive lithium iron phosphate battery packs from CATL on its Mustang Mach-E models this year and F-150 Lightning pickups in early 2024, which will boost output of those popular vehicles. Ford has said it has a plan to source 40 gigawatt hours of those batteries annually in North America in 2026, but would initially import them from China.
Ford is investing $50 billion broadly to develop and build EVs and plans to produce 2 million a year by the end of 2026. It was the second-biggest seller of EVs in the US last year, well behind Tesla, which controls almost two-thirds of the American market.
