America’s Ford Motor Co. is said to partner with its Chinese counterpart Contemporary Amperex Technology Co. Ltd. to build a battery plant in Michigan. Ford plans to invest $3.5 billion to build an electric vehicle battery plant in Michigan, betting that making the batteries in the United States will help it and Chinese partner CATL (300750. SZ) attract U.S. customers to embrace a lower-cost technology pioneered in China.
This project comes after a months-long search that became mired in geopolitical tensions between the US and China. This initiative comes with a lot of uncertainty as to how the US Treasury Department will interpret requirements in President Joe Biden’s signature climate package — the Inflation Reduction Act. The law is designed to withhold consumer tax credits for EVs made with a certain amount of China-linked materials in their batteries.
Ford in a statement said that CATL is the world’s largest battery manufacturing unit for electric vehicles and it has agreed to “accepted Ford’s invitation for collaboration in Ford’s battery factory in Marshall, Michigan by providing services and knowledge for the construction and operation of the plant, which is a wholly-owned subsidiary of Ford.”
Ford is investing $50 billion broadly to develop and build electric vehicles and plans to produce 2 million a year by the end of 2026. The Dearborn, Michigan-based automaker was the No. 2 seller of EVs in the US last year, well behind Tesla Inc., which controls almost two-thirds of the American market.
Michigan approved just over $1 billion in incentives over 15 years to win the project including “Critical Industry Program” grants of up to $210 million and $772 million to designate the project as a “Renaissance Zone” that will significantly reduce both real and personal property taxes.
Ford has not yet released details to the public and further information is yet to be announced.
