Ford to license electric vehicle battery tech from China’s CATL

Ford plans to license technology from Chinese battery group CATL to use in a $3.5bn factory it plans to build in Michigan as it accelerates a push into electric vehicles.

The carmaker’s deal with the world’s biggest battery producer comes as new US tax credits for EVs take effect under the Inflation Reduction Act climate law that passed last year.

However, the law prevents cars containing components from a “foreign entity of concern” — a reference to China, Russia, Iran and North Korea — from receiving these tax credits.

The licensing agreement with CATL differs from other recent deals struck between car companies and battery-makers, in which General Motors, Stellantis and Ford have formed joint ventures with manufacturers LG, SK and Samsung, all of which are headquartered in South Korea.

“There’s a good probability that it probably would not have been a joint venture if it wasn’t a Chinese company,” said Sam Abuelsamid, an analyst at Guidehouse Insights, said of Ford’s announcement. “It’s likely CATL and Ford looked at the political landscape and decided this was the best solution to minimise any political blowback.”

The plant will be wholly owned by a Ford subsidiary and employ 2,500 workers when it opens in three years, executives said. The Michigan-based carmaker will pay to use CATL’s formula to make lithium iron phosphate batteries, a chemistry that is cheaper but less energy-dense than today’s EV batteries containing nickel, cobalt and manganese.

“A more affordable battery will drive higher EV adoption,” said Marin Gjaja, Ford’s chief customer officer.

Ford and CATL agreed last year that the Mustang Mach-E vehicle would begin using CATL batteries this year, followed by the F-150 Lightning truck in 2024. The new lithium iron phosphate batteries will be available for both models.

Lisa Drake, vice-president of EV industrialisation at Ford, said that the company had considered the possibility that China’s government might bar the licensing of technology outside the country, and has built contingencies into the contract with CATL. CATL employees will help the plant start operations, and some of the equipment will come from China.

Ford expects that consumers who buy EVs with these batteries initially would qualify for half of the $7,500 tax credit available for consumer vehicle purchases, Gjaja said, though the sum could rise to the full amount over time based on where the carmaker procures minerals. Ford has lobbied the US government since autumn to clarify rules about to what degree EVs can include battery components manufactured by “a foreign entity of concern”.

The manufacturer considered sites in Canada and Mexico but chose to set up the plant in southwestern Michigan because of provisions in the IRA that encourage US manufacturing.

“The IRA was incredibly important to us, and frankly, it did what it was intended to do,” Drake said.

Climate Capital

Where climate change meets business, markets and politics. Explore the FT’s coverage here.

Are you curious about the FT’s environmental sustainability commitments? Find out more about our science-based targets here

Read the full article Here

Leave a Reply

Your email address will not be published. Required fields are marked *

DON’T MISS OUT!
Subscribe To Newsletter
Be the first to get latest updates and exclusive content straight to your email inbox.
Stay Updated
Give it a try, you can unsubscribe anytime.
close-link