Ford to Establish Battery Plant in Michigan with China's CATL... 100% Subsidiary

[Asia Economy New York=Special Correspondent Joselgina] Amid escalating tensions between the United States and China over reconnaissance balloons, Ford Motor Company officially announced that it will establish an electric vehicle battery plant in Michigan in partnership with China's CATL, the world's largest battery manufacturer.

According to economic media CNBC and others, Ford Motor Company announced on the 13th (local time) the establishment of an electric vehicle battery plant worth $3.5 billion (approximately 4.476 trillion KRW) in collaboration with CATL.

Ford will secure 100% ownership of the new plant. This decision is interpreted as considering the recent overt US-China conflicts over technological supremacy and the policy direction of the Joe Biden administration. By preventing investment from China's CATL, it effectively circumvents the Inflation Reduction Act (IRA), which excludes batteries made by 'foreign concern companies' from subsidies. Instead, CATL will participate in the plant's operation by providing battery technology and know-how.

Lisa Drake, Ford Motor Company's Vice President in charge of electrification, confirmed that the plant will be a wholly owned subsidiary of Ford rather than a typical joint venture. Vice President Drake stated, "We will license technology from CATL, our strategic partner." As of last year, China's CATL accounted for 37% of the global electric vehicle battery market and has no plants in the United States.

[Image source=AP Yonhap News]

The plant, to be newly established in Marshall, about 100 miles west of Detroit, is scheduled to begin operations in 2026. Ford plans to employ 2,500 people to produce lithium iron phosphate (LFP) batteries. The LFP battery production capacity is expected to reach 35 GWh. Jim Farley, Ford's CEO, emphasized, "The core of this project is to reduce the cost of electric vehicles," adding, "LFP is the most affordable battery technology." It is anticipated that this will lower electric vehicle prices as well as expand production and margins.

Local media particularly analyzed that Ford securing 100% ownership instead of a joint venture will help avoid additional political criticism within the United States and assist in qualifying for electric vehicle-related tax credits in the future. Amid the spread of anti-China sentiment due to recent US-China conflicts, there is a growing reluctance to accept investments from Chinese capital, especially in some Republican-leaning areas. Additionally, under the Inflation Reduction Act regulations, to receive tax credits, batteries must contain a certain percentage of parts manufactured or assembled in North America, and batteries made by foreign concern companies are excluded.

Initially, Ford considered building plants in Canada and Mexico, but after the Biden administration signed the Inflation Reduction Act last year, the direction shifted to the United States, according to The New York Times (NYT). Virginia was also considered as a candidate location, but the plan reportedly fell through after Glenn Youngkin, the Republican governor of Virginia and a potential presidential candidate, expressed concerns last month that cooperation with CATL would serve as a front for the Chinese Communist Party. The governor of Michigan, the final selected construction site, is a member of the Democratic Party.

Marin Zaza, Ford's Chief Customer Officer for the electric vehicle division, stated that once production begins at the Michigan plant, Ford electric vehicles equipped with these batteries could partially benefit from tax incentives under the Inflation Reduction Act. However, the exact support will depend on how the US Treasury Department finalizes the detailed requirements for battery minerals and components next month.

Ford plans to increase its global electric vehicle production to 600,000 units by the end of this year and to 2 million units by the end of 2026. It is also cooperating with Korean companies LG Energy Solution and SK On through joint ventures to establish lithium-ion battery plants in Tennessee and Kentucky. The Tennessee plant is set to begin operations in 2025, and the Kentucky plant in 2026.

This content was produced with the assistance of AI translation services.