Ford to build EV battery plant in Michigan, use Chinese tech
The $3.5 billion project will allow the company to take advantage of tax breaks in the Inflation Reduction Act, although it will utilize battery technology owned by a Chinese-based company.
ROMULUS, Mich. — Ford Motor Co. announced Monday it will build a $3.5 billion electric vehicle battery plant in Michigan that uses Chinese technology, a move the company believes will bolster its ability to take advantage of President Joe Biden’s landmark climate law.
The deal between Ford and China-based Contemporary Amperex Technology Co. Ltd., or CATL, the world’s largest producer of lithium iron phosphate batteries, is landing in the Great Lakes state after Virginia Gov. Glenn Youngkin, a Republican, said he rejected a proposal to nab the plant, citing concerns around CATL’s connections to the Chinese Communist Party (Climatewire, Jan. 31).
Ford, the nation’s second largest EV manufacturer, said a newly created subsidiary would build and completely own a sprawling complex about 100 miles west of Detroit on land near the town of Marshall.
Ford workers will build both nickel cobalt manganese and lithium iron phosphate (LFP) batteries at the facility, slated to come online in 2026, while CATL will continue to own the technology to create the cells and be contracted to provide some additional services.
When asked about the political risks of working with a Chinese company, Lisa Drake, Ford vice president of EV industrialization, emphasized on a call with reporters Monday that it’s a “very global marketplace” especially when it comes to EV batteries. She also noted that while LFP technology already exists in the U.S. — although not yet at Ford — the new project will allow the company to de-risk the process in this country, where Ford has control.
“It’s more control over the technology choice,” said Drake.
Drake also addressed concerns that the Chinese government could move to block the use of its technology. “We certainly thought through that, and those are provisions and things that we’ve agreed with CATL in the course of our contract work with them,” she said. “Of course, we’ve thought about it, and we’ve taken care of those, the optionality, in the contracts.”
Ford’s decision to build and operate in Michigan was driven by the newly minted Inflation Reduction Act, Drake said, and company officials said they’re confident the newly produced batteries will qualify for all of the production tax credits under the law, for both the cell and module, as well as commercial and lease customers. But Ford officials said questions remain for outright consumer purchases given there are income qualifications.
“I think the IRA was incredibly important for us, and, frankly, it did what it intended to do and it allowed the United States to capture 2,500 fantastic technical jobs and all the indirect jobs that go with it, as well as the future growth” said Drake. “A big win for the U.S.”
Top Biden officials, including Energy Secretary Jennifer Granholm, the former governor of Michigan, have said a surge of federal cash tied to newly passed laws like the Inflation Reduction Act could turn the state into a new hub for pumping out batteries for EVs by 2030.
More business, more scrutiny
Ford’s announcement arrives as Republican lawmakers scrutinize efforts to quickly electrify the nation’s vehicles — a push that at the moment leaves the U.S. relying on countries like China for critical minerals. That reality has been flagged on both sides of the aisle as a national security vulnerability (E&E Daily, Jan. 25).
Ford has moved to emphasize its work to uphold high environmental and human rights standards while also pivoting to dominate the EV and battery market, even as scrutiny around supply chains ramps up on Capitol Hill. Ford officials said they have audited supply chains since 2003 and insisted the company has a zero tolerance policy for child labor or forced labor.
The company touted the future use of LFP batteries in its F-150 trucks and Mustang Mach-E cars as a more affordable option that will enable vehicles to go long distances. It also offers an alternative that helps address the nation’s ongoing shortage of other critical minerals such as nickel and cobalt, which are used in different battery compositions.
The announcement aligns with plans Ford announced last year to invest more than $50 billion to develop and build EVs, and ultimately produce 2 million annually by the end of 2026. Ford also announced that CATL would supply lithium iron phosphate battery packs for its Mustang Mach-Es and F-150 Lightning pickups in early 2024.
But questions around links between the nation’s major automakers and the use of forced labor in Xinjiang, China, are also emerging on Capitol Hill.
The Uyghur Forced Labor Prevention Act, passed in 2021 by wide margins in Congress, banned the import of any good made wholly or in part in Xinjiang, under the presumption that its production would involve forced labor.
International human rights researchers say the region is the center of forced labor systems that chiefly target Uyghurs, a mostly Muslim ethnic minority group.
Late last year, Senate Finance Chair Ron Wyden (D-Ore.) launched a probe of eight automakers — including Ford — after a British report concluded that virtually every major automaker could be using parts made with Xinjiang forced labor.
Led by a Sheffield Hallam University professor of human rights and contemporary slavery, the report also raised questions about CATL’s activities in Xinjiang.
Last year, CATL registered a new jointly owned lithium processing company in the region, it noted. CATL’s new company, Xinjiang Zhicun Lithium Industry Co., subsequently boasted that it would become one of the largest producers of lithium carbonate in the world.
Wyden in a letter to Ford asked if any of its supply chains and raw materials, mining, processing or parts manufacturing are tied to Xinjiang, how the company maps its supply chains, and whether it’s ever had any goods seized by U.S. Customs and Border Protection. Ford had until Jan. 13 to respond.
When asked about the senator’s inquiry, Ford in a statement responded: “As we relayed to the Committee, Ford is committed to respecting human rights everywhere we operate and throughout our entire value chain. We will defer to the Committee regarding the release of Ford’s full response.”
Reporter David Iaconangelo contributed.
A version of this report first ran in E&E News’ Greenwire. Get access to more comprehensive and in-depth reporting on the energy transition, natural resources, climate change and more in E&E News.