Lawmakers probe Ford partnership with Chinese battery supplier CATL
Lawmakers probe Ford partnership with Chinese battery supplier CATL

Ford CEO Jim Farley announced at a press conference that Ford Motor Company will partner with the world’s largest battery company, Chinese company Ningde Times New Energy Technology Co., Ltd., to create an electric vehicle battery factory in Romulus, Michigan on February 13, 2023.

Bill Pugliano | Getty Images News | Getty Images

DETROIT – U.S. lawmakers are seeking to review the licensing agreement between the two parties Ford China-based CATL will allow the automaker to produce batteries developed by global suppliers at a planned $3.5 billion plant in Michigan.

In a letter to Ford CEO Jim Farley on Thursday, the chairman of the House China Communist Party (CCP) and U.S. House Select Committee House Ways and Means Committee The automaker was asked to provide a copy of the licensing agreement and any communications between the two companies and between Ford and the Biden administration about any potential tax credit deal.

The letter also questioned the number of Americans the plant would employ compared to Chinese workers; whether the deal would qualify for federal tax funding; CATL’s potential ties to forced labor practices; and whether the deal would indeed help reduce the country’s reliance on Chinese electric vehicle parts and materials.

The Michigan plant is expected to open in 2026 and employ about 2,500 people, the Detroit automaker said. It will produce new lithium iron phosphate (LFP) batteries, rather than the more expensive nickel-cobalt-manganese batteries the company currently uses. The new batteries are expected to offer different benefits at a lower cost, helping Ford boost EV production and margins.

Ford goes after EV leader tesla Lithium iron phosphate batteries are used in some vehicles, partly to reduce the amount of cobalt needed to make batteries and high-voltage battery packs.

CATL employees from China will fill hundreds of the 2,500 jobs Ford intends to manage before the licensing agreement expires in 2038, the letter said.

“Indeed, while executives on the proposed project will be U.S.-based Ford employees, it appears the project will rely on CATL employees from China to maintain long-term operations,” the lawmakers wrote.

On February 13, 2023, Ford CEO Jim Farley announced at the automaker’s battery laboratory in the suburbs of Detroit that he would invest $3.5 billion in a new electric vehicle battery factory in the state to produce lithium iron phosphate batteries.

Michael Whelan/CNBC

Ford has staunchly defended the deal since it was announced in February, saying it merely licensed its process to the company’s plant in rural Michigan, which will become a wholly owned subsidiary and create thousands of U.S. jobs.

Ford spokesman TR Reid said Friday the company is reviewing the letter but declined to comment directly on the news.

“Overall, much of what has been said and implied about this project has been false. Instead of buying these batteries from Asian suppliers like other automakers today, we are investing $3.5 billion to manufacture them in a factory built and operated by a wholly owned subsidiary of Ford, creating 2,500 new jobs in the United States in the process. This is good for customers, good for the country, and good for our company,” he said in an emailed statement.

Company officials said they expected batteries made at the plant would be eligible for federal incentives under the Biden administration’s inflation reduction bill.

The IRA’s incentives for domestic batteries include a credit of $35 per kWh produced and a credit of $10 per module. Ford said in May that it expects to produce about 42 gigawatt-hours a year when the plant is fully operational.

China relations

The partnership between Ford and CATL has previously been criticized by some Republican lawmakers, such as Sen. Marco Rubio (R-D.) and Rep. Jason Smith (R-D.), chairman of the House Ways and Means Committee. Smith co-signed Thursday’s letter with Rep. Mike Gallagher (D-National).

Gallagher, chairman of the House Select Committee on China, has spearheaded multiple investigations into U.S. and Chinese business interests. The Wisconsin Republican recently questioned whether U.S. companies were eager to work with Chinese companies, given the Chinese Communist Party’s alleged human rights abuses and military operations.

“When you do business in China, you look to China as your business partner,” Gallagher told reporters earlier this week. “The more fundamental question for me is why do so many American businesses and asset managers want China as a business partner?”

House Majority Leader Kevin McCarthy (R-Calif.) speaks to reporters after being elected the next House Minority Leader, along with Rep. Jason Smith (R-Mo.), Left, and House Majority Whip Steve Scalise, R-Los Angeles, at the Longworth House Office Building on Capitol Hill November 14, 2018 in Washington, DC.

Chip Somodevilla | Getty Images

Smith previously wrote to Farley in April seeking information about the deal with CATL, formally known as Contemporary Amperex Technology Ltd. Farley’s previous responses “did not provide the level of detail requested by the committee,” the new letter said.

CATL, which also has ties to Xinjiang Lithium through its former senior manager Guan Chaoyu, quietly divested its 23.6% stake shortly after the licensing agreement was announced, and Guan Chaoyu acquired the brand through a limited partnership.

“Xinjiang Lithium, which aims to become the world’s largest producer of lithium carbonate, is linked through wholly-owned subsidiaries and other relationships to companies engaged in state-sponsored labor transfer projects in the Xinjiang region,” the lawmakers wrote. “Labourers in these projects are in many cases ‘directly transferred from camps to factories’ and are ‘subject to constant surveillance.'”


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