(Bloomberg) — Ford Motor Co. and Modern Amperex Technology Co. Ltd. plan to build a battery the Michigan plant, according to people familiar with the matter, limited to a months-long search that has become mired in geopolitical tensions between the United States and China.
The multibillion-dollar facility, located about 100 miles west of Detroit, is expected to create about 2,500 jobs, the people who requested anonymity said because the plans have not been made public. They said the deal could be announced as soon as next week.
Ford is proceeding with the project despite uncertainty over how the US Treasury Department will interpret the requirements of the Inflation Reduction Act. The law is designed to withhold consumption tax credits for electric vehicles manufactured with a certain amount of China-related materials in their batteries.
“We’ve said we’re exploring batteries based on CATL technology for Ford vehicles and we plan to localize” production in North America, Ford said in an emailed statement. The company did not say whether it had chosen a site or determined other details about the scope of the project.
CATL did not immediately respond to an email request for comment outside business hours in China.
Shares of Ford fell 5.6% in New York on Friday to close at $12.73. They are up 9.5% this year.
American automaker and China’s CATL, the world’s largest battery manufacturer for tram, considered a new ownership structure under which Ford would own 100% of the plant, including the building and infrastructure, Bloomberg reported last year. According to people familiar, Ford workers will make the batteries, while CATL owns the technology to make the cells.
Such an arrangement could allow the establishment to qualify for lucrative production tax credits under the Inflation Reduction Act while not requiring direct financial investment from CATL.
The site of the new factory, near the small town of Marshall in southwestern Michigan, has plenty of room to grow, potentially yielding more jobs and larger investments, according to people familiar with the matter.
Companies also see Virginia as a possible place to locate factories, Bloomberg previously reported. That selection was quashed when Virginia Governor Glenn Youngkin, a potential Republican candidate for the White House in 2024, withdrew his state from the competition, calling CATL a “Troyan horse.” “For China, this would undermine policy efforts to strengthen the U.S. auto industry. Macaulay Porter, Youngkin’s press secretary, declined to comment on Friday.
Michigan Governor Gretchen Whitmer took a different stance from his counterpart, calling Youngkin’s move “a political will,” the Detroit News reported last month. Whitmer has struggled to attract more investment in EV batteries after losing to Tennessee and Kentucky in Ford’s historic $11.4 billion investment in the Blue Oval City in 2021.
Ford announced in July that it would begin using cheaper lithium iron phosphate battery packs from CATL on its models. Mustang Mach-E model this year and Lightning F-150 pickup trucks in early 2024, which should boost production of those popular vehicles. Ford said it plans to deliver 40 gigawatt hours of those batteries annually in North America by 2026, but will initially import them from China.
Ford is investing $50 billion broadly in developing and building electric vehicles, and plans to produce 2 million units a year by the end of 2026. The Dearborn, Michigan-based automaker is home #2 electric car sales in the US last year, far behind Teslacontrols nearly two-thirds of the US market.
–With support from Craig Torres.
