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Ford Inks Controversial Battery Deal With Chinese Company

One of the biggest carmakers in the world, Ford, has struck a deal with the world’s biggest EV battery maker, CATL, to license its technology at a new, $3.5-billion battery plant in Michigan.

While the deal will allow Ford to take advantage of funds being made available by the federal government for the energy transition, it also goes against a major stipulation in the Inflation Reduction Act that allocates these funds: that they stimulate local production, research, and development.

The IRA stipulation about local development will not officially be violated, because Ford will simply license the battery technology of CATL rather than setting up a joint venture with it or buying batteries from it, Reuters columnist Katrina Hamlin noted in a commentary on the news.

Yet it also shows that hard as the Biden administration might try, it would be quite a challenge to eliminate any dependence on China in the EV area, since China is the clear global leader not only in rare earths processing capacity but battery technology as well.

The new Ford battery plant is planned to open in 2026 and will create some 2,500 jobs, according to sources quoted by CNBC. The site in Michigan was picked after Virginia withdrew from the race citing Ford’s relationship with CATL.

“The LFP [lithium ferro-phosphate] technology is already here in the U.S. It’s in a lot of consumer electronics devices, it’s actually in another OEM product, but, unfortunately, it’s always imported,” said Lisa Drake, president of EV industrialization at Ford, as quoted by CNBC.

“This project is aimed at de-risking that by actually building out the capacity and the capability to scale this technology in the United States, where Ford has control,” Drake also said.

The chairman of Ford’s board said that CATL will effectively be helping the carmaker produce more EVs at home and make them more affordable for buyers.

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By Charles Kennedy for Oilprice.com

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