Ford Pauses Controversial EV Battery Plant Project with Chinese Partner

Samantha Miller

Ford, a Detroit-based carmaker, and Contemporary Amperex Technology Co. Limited (CATL), a Chinese battery behemoth, have abruptly suspended development of a $3.5 billion electric vehicle battery plant in Michigan.

For months, Republican lawmakers and national security experts have voiced growing misgivings about working with a Chinese corporation with ties to the Chinese Communist Party.

Ford did not specify what caused the construction suspension, but did say they wanted to “re-evaluate the plant’s competitiveness and future viability.” The corporation claims it has not yet decided whether or not to carry out the project as intended.

Ford’s commitment to building a battery plant in Marshall, Michigan was revealed in February as a cornerstone investment in the company’s shift to EVs. Ford said that this will result in the creation of 2,500 new jobs in the car industry in the United States, and Democrats in Michigan, including Governor Gretchen Whitmer, applauded the move.

Although the plant was being explored in both Washington and Virginia, Republican Governor Glenn Youngkin voiced his opposition to the project because of its ties to China. It was believed that the Chinese government, and by extension CATL, would have a monopoly on battery production and technology.

Despite the fact that the Chinese Automobile Technology and Logistics Company (CATL) is privately held, its founder and top executives have ties to the CCP through the Chinese People’s Political Consultative Conference. Investors with ties to China’s ruling party also back the business financially.

A trade group led by former ambassadors Peter Hoekstra and Joseph Cella has been vocally critical of the deal, issuing a joint statement in which they said, “From the outset, Ford Motor Company, the State of Michigan, the Michigan Economic Development Corporation, and all other parties to it have been irresponsible in advancing this deal.”

CATL has recently brought attention to its role in securing lithium supplies for China’s electric vehicle supply chains. This fueled claims that American factories were being used to advance Chinese business and maybe Chinese national security goals.

Republican leaders in the House have initiated inquiries into the Ford-CATL initiative, raising concerns about China’s increasing influence over the manufacturing of electric vehicles in the United States. In their words, “should China gain control of domestic electric vehicle production, the United States would be exposed to serious national security risks.”

Over the past six months, Ford has vigorously defended its alliance as a net creator of jobs in the United States. Ford looks to have been forced to slow down by rising political pressure.

The plant’s fate is in doubt after Monday’s news. Ford has announced it will curtail project spending while it reevaluates the plant’s feasibility and competitiveness. The company may nonetheless move forward, albeit with fewer ambitions, even without CATL’s participation.

It would be embarrassing for Ford to back out of the half-built facility after marketing it as essential to the company’s electric transition. Ford’s investments in Michigan have been significantly financed by the state government, and this could sour relations between the two.

If CATL is ultimately scrapped, Ford CEO Jim Farley will be under intense scrutiny from lawmakers. Even if building has been temporarily halted, Republican leaders have made it clear they will not give up their opposition to the project.

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CATL’s ambitious expansion plans in North America are likely to see this as a serious setback. Washington’s growing hostility toward Chinese tech cooperation may be difficult for the corporation to overcome.

However, CATL has leverage due to China’s monopoly in electric car batteries, as Ford and other automakers rely significantly on importing Chinese-made batteries and have few other options.

Without the Michigan megafactory as its foundation, Ford’s electric vehicle strategy is in jeopardy. Ford’s shift will be supported by a range of upcoming electric vehicles (EVs) after scheduled debuts such as the F-150 Lightning truck.

The shock on the faces of Michigan’s elected representatives shows just how crucial this factory was to the state’s ambition for economic growth. Ford may have a hard time coming up with a suitable replacement project.

New joint ventures and supply chain ties to China will require automakers to assess the potential impact of geopolitical tensions and threats to national security. The Ford scandal has shown that these kind of arrangements will be subject to far more scrutiny than in the past.

Regardless of the financial benefits, automakers like Ford must heed bipartisan efforts to curb China’s reach into U.S. industry. Policymakers are gaming the system to ensure domestic production of electric automobiles at all costs.

Ford felt obligated to halt operations at the in-the-crosshairs battery production under those conditions. In the next months, we’ll learn if this is just a temporary setback before we get back on track with the project, or if it’s the beginning of the end.

SOURCES: Fox Business
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Samantha Miller is a business and finance journalist with over 10 years of experience covering the latest news and trends shaping the corporate landscape. She began her career at The Wall Street Journal, where she reported on major companies and industry developments. Now, Samantha serve as a senior business writer for, profiling influential executives and providing in-depth analysis on business and financial topics.