Will the Ford·China CATL Deal Bypassing the IRA Ultimately Fall Through?

U.S. automaker Ford has abruptly halted its $4.7 billion Michigan battery plant project, which it was pursuing in partnership with Chinese battery company CATL. The deal between the two companies to establish a battery joint venture in the U.S. using Chinese capital and technology had faced criticism for circumventing the Biden administration's Inflation Reduction Act (IRA).

On the 25th (local time), according to Bloomberg and other sources, Ford stated, "We will pause construction of the battery plant being built in Marshall, Michigan, until we are confident that the plant can operate competitively." However, they added, "This is not a final decision regarding the investment in the project."

This decision came amid investigations by the U.S. House Ways and Means Committee and the U.S.-China Strategic Competition Special Committee into Ford and CATL's joint plant project. Earlier, the House Ways and Means Committee and the U.S.-China Special Committee sent a letter to Ford CEO Jim Farley requesting documents related to the cooperation with CATL. The partnership, including the establishment of the joint plant, had been criticized for violating the IRA's prohibitions related to tax credit eligibility.

The IRA, which took effect in August last year, provides tax credit benefits for electric vehicles that are finally assembled in North America. Starting this year, for batteries, at least 50% of the total component value must be manufactured in North America. Subsequently, some Chinese battery companies announced plans to build battery plants in the U.S. in partnership with American automakers, which drew criticism for allowing Chinese companies to benefit from IRA subsidies and undermining the IRA’s goal of establishing a battery supply chain independent of China.

Earlier, in February, Ford announced plans to invest $3.5 billion (approximately 4.7 trillion won) with CATL to build a battery plant in Marshall, Michigan. CATL, the world’s largest electric vehicle battery manufacturer with a 37% market share, operates 13 plants worldwide but this was its first announced plant in the U.S. Ford had explained that the Michigan battery plant would create 2,500 jobs and produce lithium iron phosphate (LFP) batteries that are cheaper and charge faster starting in 2026.

Meanwhile, the United Auto Workers (UAW) union is conducting simultaneous strikes at the three major U.S. automakers, including Ford. Last week, UAW expanded the strike to include 38 parts distribution centers (PDCs) of General Motors (GM) and Stellantis, but excluded Ford from the expansion citing progress in negotiations.

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