"Will You Keep Working With China?" U.S. Congress Moves to Check Ford-CATL Partnership

U.S. House Select Committee on China Sends Letter to Ford CEO
Requests Details on Duration of CATL Partnership and Licensing Agreements
Key Issue: Will Ford Qualify for OBBBA Tax Credits?
Ford Asserts: "All Conditions Met, No Issues"

As Ford Motor Company expands its partnership with CATL, China's largest battery manufacturer, the U.S. Congress has begun to investigate whether this collaboration may violate relevant laws or tax credit regulations. As a result, there is a possibility that Ford's future business could face obstacles.

According to Investing.com and other sources on January 28 (local time), John Moolenaar, Chairman of the U.S. House of Representatives Select Committee on China, sent a letter the previous day to Ford CEO Jim Farley, requesting clarification on the nature of Ford's partnership with CATL. Chairman Moolenaar stated, "China poses a serious threat to the independence of our supply chains and our economic security. As you know, the U.S. automotive industry is not exempt from this challenge."

In the letter, Chairman Moolenaar asked Ford to "explain the terms of the licensing agreement between Ford and CATL" and to clarify "whether any amendments or expansions have been made to the licensing agreement since the enactment of the 'One Big Beautiful Bill (OBBBA)' in July of last year." He further requested an explanation on "whether Ford is considering joint investments or technology transfers with other Chinese automakers or battery manufacturers such as BYD." He emphasized, "China has demonstrated in recent months its willingness to weaponize the automotive supply chain," and added, "If Ford establishes a new partnership with BYD, the situation will become even more serious."

Letter sent by the U.S. House of Representatives Select Committee on China to Jim Farley, CEO of Ford, on the 27th. U.S. House Select Committee on China.

This scrutiny comes as Ford and CATL have recently expanded their cooperation in various ways. On January 26, Ford announced that it would convert its Kentucky plant into an energy storage system (ESS) facility in collaboration with CATL, and launched its subsidiary, Ford Energy. The Kentucky plant was originally a joint venture between Ford and SK On. In addition, Ford's Marshall plant in Michigan, which has licensed CATL's lithium iron phosphate (LFP) technology, will begin producing batteries for electric vehicles by the end of this year.

However, last year, the U.S. Department of Defense raised suspicions that CATL is linked to the Chinese military. In response, the OBBBA-an extensive tax cut policy from the Trump administration-has been invoked as a countermeasure. This bill significantly increases tax credits for investments in facilities and equipment within the United States, but restricts ties with foreign entities (PFE) such as China. If the proportion of battery components and critical minerals sourced from PFEs exceeds a certain threshold, subsidies and other benefits are excluded. However, if a licensing agreement was signed before the bill's enactment, it may still be eligible for benefits as long as the contract terms remain unchanged.

Given this, Ford's Marshall plant in Michigan, which will begin operations this year, appears likely to become a target for the House. The batteries produced at this site currently qualify for federal manufacturing tax credits under OBBBA. However, since CATL's license applies, Congress is expected to review whether the licensing agreement has ever been amended and whether the requirements for tax credits are being met.

Interior view of the Ford Motor Company’s Marshall plant under construction in Michigan, USA. Ford.

For now, Ford maintains that there is no issue. A Ford spokesperson told local media, "Expanding LFP battery production in the U.S. is not only an investment in energy security but also an investment in American workers," adding, "Each new facility creates thousands of highly skilled manufacturing jobs and strengthens the local economy." The spokesperson further emphasized, "The batteries produced at the Kentucky and Michigan plants meet the qualifications for federal tax credits and are fully consistent with the intent of the law."

However, skepticism is unlikely to subside easily. Chinese battery manufacturers have already faced repeated opposition in the U.S. Gotion High-Tech, a Chinese battery manufacturer, abandoned its plan to build a plant in Michigan, while Automotive Energy Supply, a Japanese-headquartered company owned by Chinese interests, halted construction of its plant in Kentucky.

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