Ford to Partner with Chinese Company on Battery Factory
Ford is often associated with old-fashioned American values, a successful, patriotic automotive giant that’s survived all the turmoil of the 20th century and the various recessions of the 21st. But it’s important to remember that they’re a business first and a patriot second. Case in point – their partnership with China’s Contemporary Amperex Technology Co. Limited (CATL) to help the latter circumvent the Inflation Reduction Act.
CATL and Ford are jointly planning a factory for lithium iron phosphate (LFP) batteries. The hitch is that it would be owned by Ford but operated by CATL, skirting the bylaws of the Inflation Reduction Act, which requires automakers to source 40% of the minerals used in EV batteries from North America or US allies by 2024 and 80 per cent by the end of 2026.
Needless to say, the IRA is meant to preclude rivals like the People’s Republic of China.
In fact, it’s meant to kickstart a complete EV supply chain overhaul, as the nonprofit RMI noted in the aptly titled piece, “How the Inflation Reduction Act Will Spur a Revolution in EV Battery Supply Chains.”
According to the International Energy Agency, demand for battery minerals will increase sevenfold by 2030, and China currently supplies the overwhelming majority of the world’s critical minerals (like 80% of the globe’s cobalt).
Forcing automakers to acquire 40-80% of EV battery minerals from American sources will definitely increase costs, which should be at least partially offset by tax credits from the IRA.
But whether automakers push those initial cost increases on to consumers (almost assuredly), and whether those tax credits filter their way back to the public (by lowering EV price tags) remains to be seen. I have my doubts.
For their part, the Chinese government has long discouraged CATL from direct investment in the American automaker industry owing to international political tensions.
