Ford CEO Jim Farley publicizes at a press conference that Ford Motor Company will partner with the world’s largest battery manufacturer, China’s Contemporary Amperex Technology, to determine a Marshall, Michigan electric vehicle battery plant on February 13, 2023 in Romulus, Michigan.
Bill Pugliano | Getty Images | News Getty’s paintings
DETROIT – US lawmakers are scrambling to review the licensing agreement between Ford engine and China-based CATL, which might allow the automaker to provide battery cells developed by a worldwide supplier at a planned $3.5 billion plant in Michigan.
In a Thursday letter to Ford CEO Jim Farley, the chairmen of the House Select Committee of the Communist Party of China (CCP) and House Ways and Means Committee it required the automaker to supply a duplicate of the licensing agreement and any communications regarding the agreement 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 employed on the factory in comparison with Chinese staff; whether the transaction should qualify for federal tax financing; CATL’s potential links to forced labor practices; and whether the deal will actually help reduce the country’s dependence on China for electric vehicle parts and materials.
The Michigan plant is predicted to open in 2026 and can employ about 2,500 people, in line with the Detroit automaker. It’s going to produce latest lithium iron phosphate, or LFP, batteries, versus the costlier nickel cobalt manganese batteries the corporate currently uses. The brand new batteries are expected to supply various advantages at a lower cost, helping Ford increase electric vehicle production and profit margins.
Ford follows EV leader Tesla in using LFP batteries in a few of their vehicles, partly to cut back the quantity of cobalt needed for the production of battery cells and high-voltage battery packs.
In response to the letter, several hundred of the proposed 2,500 jobs managed by Ford will probably be filled by CATL employees from China by the point the license agreement expires in 2038.
“Indeed, while the management of the proposed project will probably be US-based Ford employees, the project appears to depend on PRC CATL employees to sustain operations in the long run,” the lawmakers wrote.
Ford CEO Jim Farley, at a battery lab for an automaker in suburban Detroit, publicizes the development of a latest $3.5 billion electric vehicle battery factory within the state to provide lithium iron phosphate batteries, Feb. 13, 2023.
Michael Wayland/CNBC
Ford has vehemently defended the deal because it was announced in February, saying it was simply licensing the corporate’s processes for its plant in rural Michigan, which will probably be a completely owned subsidiary that creates 1000’s of jobs within the US.
Ford spokesman TR Reid said on Friday that the corporate was reviewing the letter but declined to comment directly on the news.
“Generally, much of what has been said and suggested about this project is incorrect. As a substitute of shopping for these batteries from suppliers in Asia, as other automakers do today, we are investing $3.5 billion to provide them in a factory built and operated by a Ford subsidiary, creating 2,500 latest jobs in America. It’s good for patrons, good for the country and good for our company,” he said in an emailed statement.
Company officials 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 it expected the plant’s annual output to be around 42 gigawatt hours when fully operational.
Chinese ties
The link between Ford and CATL has previously been criticized by some Republican lawmakers, comparable to Senator Marco Rubio and Congressman Jason Smith, chairman of the House Ways and Means Committee. Smith signed Thursday’s letter with Congressman Mike Gallagher.
Gallagher, who chairs the House Select Committee on the CCP, has initiated several investigations into U.S. and Chinese business interests. A Wisconsin Republican recently questioned the willingness of U.S. firms to work with Chinese firms in the sunshine of alleged human rights violations and Chinese Communist Party military campaigns.
“You’re taking the CCP as your online business partner if you do business in China,” Gallagher told reporters earlier this week. “For me, the rather more fundamental query is why achieve this many American firms and asset managers want the CCP as a business partner?”
House Majority Leader Kevin McCarthy (R-CA) talks to reporters after his election as House Minority Leader for the subsequent Congress with Representative Jason Smith (R-MO) (L) and House Majority Whip Steve Scalise (R-LA) on the Longworth House office constructing on Capitol Hill, Washington, DC, November 14, 2018.
Chip Somodevilla | Getty’s paintings
Smith had previously sent a letter to Farley in April asking for details about a deal with CATL, formally named Contemporary Amperex Technology Co. The brand new letter states that Farley’s previous responses “didn’t provide the extent of detail expected 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 interest shortly after the licensing deal was announced.
“Xinjiang Lithium – which goals to turn out to be the world’s largest producer of lithium carbonate – is linked through subsidiaries and other relationships with firms that engage in state-sponsored labor transfer programs within the Xinjiang region,” the lawmakers wrote. “Employees in these programs are in lots of cases ‘transferred directly from camps to factories’ and ‘consistently monitored.’