Ford USA and CATL China
Ford Motor Co USA and CATL China are reportedly planning to build an EV battery plant in Michigan, United States. Ford is a Global automaker whereas Contemporary Amperex Technology-CATL is World’s Top EV Battery Maker. Ford has plans to announce a new $3.5 billion battery plant in partnership with China’s CATL.
The CATL is a manufacturer of lithium-iron phosphate batteries for EVs, including the Mustang Mach-E. Michigan is expected to offer $1 billion in incentives to the automaker as the manufacturing facility is likely to produce 2,500 jobs. The EV battery manufacturing project is part of efforts by Ford to comply with the rules under the Inflation Reduction Act (IRA) as set by the Biden administration. The Act lets EVs assembled in North America get a $7,500 tax credit.
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It is good to share that Ford and CATL may have a novel ownership structure. In this structure, Ford would own 100% of the plant, including the machinery and building. Ford would build the batteries, while CATL will own the technology part to develop and create the cells. This ownership arrangement may allow the plant to avail of the lucrative Production Tax Credits as allowed in the Inflation Reduction Act. As such CALT will not have a direct financial investment.
Ford in July 2022 announced that it will start using less expensive lithium iron phosphate battery packs from CATL. The timeline for use of CALT batteries for Mustang Mach-E models was 2023 and for F-150 Lightning pickups in early 2024. This arrangement is expected to boost the output of these popular vehicles. Ford also added that it has plans to produce 40 gigawatt-hours of CALT batteries annually in North America in 2026, however, initially they will import from China.
Overall Ford is investing $50 billion to develop and build EVs and has plans to produce 2 million per year by the end of 2026. Ford was the second-biggest seller of EVs in the US in 2022. However, it was much behind Tesla, as Tesla controls nearly two-thirds of the USA market.
Just to add, the $3.5 billion battery plant would add to the $11.4 billion investment by Ford Motor Co. Ford has made this investment in partnership with SK Innovation of South Korea to install battery and EV factories in the states of Tennessee and Kentucky.