Ford CEO Jim Farley broadcasts at a press conference that Ford Motor Company might be partnering with the worlds largest battery company, a China-based company called Contemporary Amperex Technology, to create an electric-vehicle battery plant in Marshall, Michigan, on February 13, 2023 in Romulus, Michigan.
Bill Pugliano | Getty Images News | Getty Images
DETROIT – U.S. lawmakers are in search of to review a licensing deal between Ford Motor and China-based CATL that might allow the automaker to provide battery cells developed by the worldwide supplier at a planned $3.5 billion plant in Michigan.
In a letter Thursday addressed to Ford CEO Jim Farley, chairs of the House Select Committee on the Chinese Communist Party (CCP) and the House Ways and Means Committee demanded the automaker provide a duplicate of the licensing agreement and any communication concerning the deal between the 2 firms in addition to between Ford and the Biden administration regarding any potential tax credits.
The letter also questions the variety of Americans that the plant will employ compared with Chinese staff; whether the deal should qualify for federal tax funding; CATL’s potential connections to forced labor practices; and if the deal indeed assists in lowering the country’s dependency on China for parts and materials for electric vehicles.
The Michigan plant is anticipated to open in 2026 and employ about 2,500 people, based on the Detroit automaker. It would produce latest lithium iron phosphate batteries, or LFP, versus pricier nickel cobalt manganese batteries, which the corporate is currently using. The brand new batteries are expected to supply different advantages at a lower cost, assisting Ford in increasing EV production and profit margins.
Ford follows EV leader Tesla in using LFP batteries in a portion of its vehicles, partially to scale back the quantity of cobalt needed to make battery cells and high-voltage battery packs.
Several hundred of the proposed 2,500 jobs managed by Ford might be staffed by CATL employees from China until the licensing agreement expires in 2038, based on the letter.
“Indeed, although the executives of the proposed project might be US-based Ford employees, it seems that the project will depend on CATL employees from the PRC to take care of operations in the long run,” the lawmakers wrote.
Ford CEO Jim Farley at a battery lab for the automaker in suburban Detroit, announcing a latest $3.5 billion electric vehicle battery plant within the state to provide lithium iron phosphate batteries, Feb. 13, 2023.
Michael Wayland/CNBC
Ford has adamantly defended the deal because it was announced in February, saying it is solely licensing the corporate’s processes for its facility in rural Michigan, which might be an entirely owned subsidiary that creates 1000’s of U.S. jobs.
Ford spokesman T.R. Reid said Friday the corporate is reviewing the letter but declined to directly comment on the message.
“Broadly, a whole lot of what’s been said and implied about this project is unsuitable. As a substitute of shopping for these batteries from suppliers in Asia – like other automakers do today – we’re investing $3.5 billion to make them in a plant built and run by an entirely owned Ford subsidiary, creating 2,500 latest American jobs in the method. This is sweet for purchasers, good for the country and good for our company,” he said in an emailed statement.
Company officials have said they expect the battery cells produced on the plant to qualify for federal incentives under the Biden administration’s Inflation Reduction Act.
IRA incentives for domestically produced battery cells include credits of $35 per kilowatt hour produced and $10 per module. Ford said in May that it expects the plant to have an annual output of about 42 gigawatt hours once it’s fully up and running.
China ties
The tie-up between Ford and CATL has previously been criticized by some Republican lawmakers equivalent to Sen. Marco Rubio and Rep. Jason Smith, chairman of the House Ways and Means Committee. Smith cosigned the Thursday letter with Rep. Mike Gallagher. Â
Gallagher, who chairs the House Select Committee on the CCP, has spearheaded several probes into U.S.-China business interests. The Wisconsin Republican recently questioned American firms’ eagerness to work with Chinese firms in light of the Chinese Communist Party’s alleged human rights abuses and military campaigns.
“You are taking on the CCP as what you are promoting partner once you’re doing business in China,” Gallagher told reporters earlier this week. “To me, the way more fundamental query is why achieve this many American businesses and asset managers want the CCP as a business partner?”
House Majority Leader Kevin McCarthy (R-CA) talks to reporters following his election to House minority leader for the following Congress with Rep. Jason Smith (R-MO) (L) and House Majority Whip Steve Scalise (R-LA) within the Longworth House Office Constructing on Capitol Hill November 14, 2018 in Washington, DC.Â
Chip Somodevilla | Getty Images
Smith previously sent a letter to Farley in April in search of information concerning the cope with CATL, formally named Contemporary Amperex Technology Co. The brand new letter states Farley’s previous responses “didn’t provide the extent of detail sought by the Committee.”
CATL also has ties to Xinjiang Lithium through its former senior manager Guan Chaoyu, who purchased the brand through a limited partnership after CATL quietly divested 23.6% of its ownership stake shortly after the licensing agreement was announced.
“Xinjiang Lithium—which goals to turn into the most important lithium carbonate producer on this planet—is tied through wholly-owned subsidiaries and other relationships to firms that engage in state-sponsored labor transfer programs within the Xinjiang region,” the lawmakers wrote. “The laborers in these programs are in lots of cases ‘transferred directly from camps to factories’ and ‘subjected to constant surveillance.'”
