Ford plans Michigan battery factory using Chinese tech

ROMULUS, Mich. — Ford Motor said last week that it planned to build a $3.5 billion electric-vehicle battery factory in Michigan using technology licensed from a Chinese company that has become one of the most important players in the auto industry.

The plant, to be built in Marshall, a rural town about 100 miles west of Detroit, will be the latest in a growing list of new battery and electric-car factories that companies have announced in recent months. Ford expects to employ about 2,500 people at the plant and begin production in 2026.

The automaker said it would own 100% of the plant and make battery cells using technology and services from Contemporary Amperex Technology Ltd., known as CATL. The company, the world’s largest producer of batteries for electric vehicles, has 13 factories of its own in Europe and Asia but none in the United States.

Just a quarter-century ago, Chinese officials were eagerly asking U.S. automakers to bring their investments and expertise to China. Today, the roles are reversed, with one of America’s most storied industrial giants asking China for the technology needed to survive in a rapidly changing global automotive landscape.

“This will help us build more EVs faster,” William Clay Ford Jr., the company’s executive chairman, said recently. He added that CATL would “help us get up to speed so we can build the batteries ourselves.”

The alliance comes at a time of considerable tension between Washington and Beijing, after the United States shot down a Chinese surveillance balloon off the coast of South Carolina on Feb. 4. Secretary of State Antony Blinken abruptly canceled a trip to Beijing after the spy balloon was sighted above Montana.

Two more unidentified objects were shot down this month, one over northernmost Alaska and another over northern Canada. A fourth unidentified object was shot down last week over Lake Huron, off the eastern shore of Michigan.

China last week accused the United States of having sent high-altitude balloons through its airspace without permission more than 10 times since the start of last year.

The balloon dispute appeared to have interrupted efforts by China to attract more foreign investment after it ended nearly three years of “zero covid” policies and began to reopen its borders. Many politicians in the United States remain wary of China and of Chinese investment.

Gov. Glenn Youngkin of Virginia, a Republican, last month withdrew his state’s bid for Ford’s venture with CATL.

He described the planned project to Bloomberg Television on Jan. 20 as a “Trojan horse” for the Communist Party of China.

Ford is seeking to insulate itself from U.S.-China tensions by opting to own the factory entirely and only licensing technology from CATL, which supplies batteries to Tesla, BMW and other large automakers.

The company said its contract with CATL includes provisions to work through difficulties that arise between the two countries. “Of course we’ve thought about it,” Lisa Drake, Ford’s vice president of EV industrialization, said in a conference call with reporters, without disclosing further details.

Ford, General Motors and other automakers are building other battery plants that are jointly owned with South Korean partners. Ford is building two battery plants in Kentucky and a third in Tennessee, both with SK On. GM recently started production at a battery plant in Ohio that it jointly owns with LG Energy Solution, and the partners are building two more plants, in Tennessee and Michigan.

Ford’s new plant will produce batteries that include lithium, iron and phosphate, a combination known as LFP. These batteries are less expensive because they do not include expensive ingredients such as cobalt and nickel used in other batteries. LFP batteries also have the advantage of being more durable. But batteries that contain cobalt and nickel hold more energy, allowing electric vehicles to go farther before needing to be charged.

“The whole point of this project is to lower the cost of EVs,” Ford CEO Jim Farley said. “LFP is the most affordable battery technology.”

Ford had looked at building the factory in Canada and Mexico but chose a U.S. site after the Inflation Reduction Act was signed into law last year by President Joe Biden. The act provided tax incentives to companies that build battery factories in the United States. Car buyers are also eligible for tax credits for electric vehicles made in North America that include batteries and raw materials from the region or another U.S. trade ally.

“This is the reason the IRA was passed,” Farley said, referring to the Marshall plant.

Ford’s decision is also a big victory for Michigan. Over the past two years, automakers have chosen Southern states for more than a half-dozen auto plants.

Ford said its plant would be able to produce enough batteries for 400,000 electric vehicles a year.