Ford Motor Company’s plan to create batteries for the rapidly expanding electric vehicle (EV) market could encounter congressional speed bumps because of the carmaker’s plan to use technology created by a Chinese company with ties to the communist government.
Ford executive chairman William Clay Ford Jr. announced in February that the company would spend $3.5 billion to build a new battery plant in Michigan and employ U.S. workers to promote U.S. “independence” in the EV market.
“Right now, many [U.S.] automakers import most of their batteries from abroad,” Ford said at that time. “This is a slow process that makes us vulnerable to supply chain disruptions.”
He added that the U.S.-produced batteries would “charge faster” and be “more affordable” and “incredibly durable.”
But the news did not sit well with some lawmakers, including Republican Senator Marco Rubio, who opposed President Joe Biden’s 2022 Inflation Reduction Act, which included tax credits to encourage domestic EV production.
Earlier this month, Rubio introduced legislation blocking tax credits for producing EV batteries using Chinese technology and called on the Biden administration to review Ford’s partnership with the company, Contemporary Amperex Technology Co. Ltd. (CATL).
“Nine billion to help people buy tax credits,” Rubio said. “By the way, with a Chinese battery in it. … I imagine we’ll spend a bunch more money to buy solar panels which are also made in China.”
In a Skype interview last week with VOA, China expert Jonathan Ward said “the White House has already called for a supply chain review that would cover essentially next generation batteries, critical minerals and rare earths, pharma and other biotechs.”
“We’re in the midst of this competition for supply chain security and industrial capacity where relying on our primary geopolitical adversary is really untenable in the long run,” he said.
Ward has authored two books outlining China’s economic, military and political goals. He said decades of outsourcing technology and manufacturing has left the United States with little choice but to work with Chinese companies like CATL to advance domestic EV development.
“Essentially 60% of the battery market is made up of Chinese corporations,” he said. “CATL, the battery maker in question here, is already 34% of global market share. The other companies are Japanese and South Korean, but they are smaller than the aggregate Chinese battery makers. So, we have this contest that we are going to have to deal with.”
Sarah Bauerle Danzman, an associate professor in international studies at Indiana University Bloomington, said since the U.S. currently “doesn’t have the capability” to produce EV batteries, “what is the theory of change that helps us get to that capacity?”
“Then the question becomes, are we becoming overly reliant or staying reliant on technology that ultimately the Chinese government controls rather than the U.S.?” she said.
From 2019 to 2020, Danzman was a policy adviser and case analyst with the Committee on Foreign Investment in the United States (CFIUS) at the State Department’s Office of Investment Affairs. She led the unit that reviews foreign investment transactions for possible national security concerns.
Rubio wants CFIUS to review Ford and CATL’s licensing agreement.
“Rubio is really focused on this idea that we don’t want to be dependent on Chinese technology,” she explained to VOA last week via a Skype interview. “The U.S. government coming in and changing those structures is a big imposition on the private sector, so there really does need to be a strong argument for why it needs to do so.”
“I think a lot of companies are going to find themselves in situations like this where Chinese partnerships [are] coming back to haunt us here,” said Ward. “I think our companies that have been entangled in the China market all have to reassess what they are doing.”
In its response to Rubio’s proposed legislation, Ford said its own subsidiary will build and operate the new battery plant in Michigan, and that “no other entity will get U.S. tax dollars for this project.”
During February’s announcement, Ford CEO Jim Farley said the proposed BlueOval Battery Park Michigan meets goals outlined by the Biden administration.
“We’re growing production of batteries here at home, reflecting the central purpose of the Inflation Reduction Act — that’s why it was passed, for this project,” Farley said.
Ford’s plans for the new Michigan facility come as the auto manufacturer reported more than $2 billion in operating losses in EV-related business in 2022.