Ford Motor Co. recently announced plans to invest $3.5 billion to build an electric vehicle battery plant in Michigan with Chinese partner Contemporary Amperex Technology Limited (CATL)—the world’s number 1 maker of electric-car batteries with 13 factories in Europe and Asia. CATL would license technology to Ford to produce lithium iron phosphate (LFP) batteries and would provide the U.S. automaker with technical assistance. Building LFP batteries in Michigan enables Ford to obtain significant U.S. battery manufacturing subsidies from the Inflation Reduction Act that could help it hit a goal of 8 percent profit margins on its EV operations by 2026. IRA ties a significant share of federal subsidies to domestic production and raw materials content. Automakers and EV battery producers are setting up manufacturing in the United States to take advantage of federal subsidies that could generate up to $45 per kilowatt hour, offsetting the costs of production.

LFP batteries are less expensive than lithium-ion batteries because they do not include expensive ingredients like cobalt and nickel used in other batteries. LFP batteries also have the advantage of being more durable. But batteries that contain cobalt and nickel hold more energy, allowing electric vehicles to go farther before needing to be charged. Ford’s plan hinges on a judgment that lower cost and faster recharging will attract more customers, including commercial fleet buyers, who would accept the limitations of LFP batteries.

Ford plans to employ about 2,500 people at the plant and begin production in 2026. The Marshall plant, located 100 miles west of Detroit, is scheduled to launch with 35 gigawatt-hours of capacity – enough for 400,000 EVs a year – with room for expansion. The company plans to use the LFP batteries in its Mustang Mach-E, a sport-utility vehicle, and the F-150 Lightning, a pickup truck, and other electric vehicles. CATL will supply Ford with LFP cells until the Marshall plant begins production.

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 reduce both real and personal property taxes.

The Marshall factory is one of four battery plants Ford has announced plans to build in North America and Europe. Ford, General Motors and other automakers are building battery plants that are jointly owned with South Korean partners. Ford is building two battery plants in Kentucky and a third in Tennessee, both with SK On. G.M. recently started production at a battery plant in Ohio that it jointly owns with LG Energy Solution, and the partners are building two more plants, in Tennessee and Michigan.

Controversy Abounds

The announcement that Ford would be collaborating with China’s CATL produced criticism from U.S. leaders because CATL is owned by Chinese state-owned private equity firm Bohai Harvest RST. Further, 10 percent of the firm is tied to Joe Biden’s son Hunter Biden’s company, Skaneateles. China currently controls the supply chains for most of the production and/or processing of lithium, used in EV battery development, as well as the supply chain for EV battery materials, which has led them to world domination of manufacturing of EV batteries.  Senator Marco Rubio has called for an immediate CFIUS (Committee on Foreign Investment in the U.S.) review of the deal, saying the deal “will only deepen U.S. reliance on the Chinese Communist Party for battery tech, and is likely designed to make the factory eligible for Inflation Reduction Act (IRA) tax credits,” in a statement posted on his website.

Virginia had the opportunity to host the plant, but Virginia Governor Glenn Youngkin removed his state from consideration in December, calling it a “Trojan horse.” A Youngkin spokesperson said, “While Ford is an iconic American company, it became clear that this proposal would serve as a front for the Chinese Communist party, which could compromise our economic security and Virginians’ personal privacy.”  “Virginians can be confident that companies with known ties to the Chinese Communist Party won’t receive a leg up from the Commonwealth’s economic incentive packages.”


Ford is building a battery plant in Michigan with partner CATL—a Chinese firm that is the number one battery manufacturer in the world. The incentive for the partnership was the ability to produce LFP batteries that are cheaper than lithium-ion batteries and to obtain lucrative incentives from the Inflation Reduction Act by building the plant in the United States. Because of the partnership with a Chinese firm, Virginia refused to host the plant indicating national security concerns. Ford’s partnership with CATL is concerning to Congressional leaders, who intend to look closely at the business partnership.

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