BEIJING, September 27 (TMTPost)— Contemporary Amperex Technology Co. Ltd. (CATL), the largest power battery manufacturer in China and the world, denied recent report about suspension of a U.S. plant project with auto giant Ford Motor Company.

Credit：CATL

CATL made aware of the recent news and it is still proceeding with the project partnered with Ford as usual, staff at the battery manufacturer’s office of corporate secretaries told the state news agency China News Service. The response obviously contradicts with Ford’s confirmation earlier this week.

The Wall Street Journal reported Monday that Ford is halting construction of its plan in Marshall, Michigan, and limiting spending on the factory, suggesting the pause was made amid political criticism. Several House committees launched investigations into CATL and Ford’s cooperation and the project, arguing it would enable Chinese domination of the U.S. auto industry, the report said.  “We’re pausing work and limiting spending on construction on the Marshall project until we’re confident about our ability to competitively operate the plant,” Ford spokesperson TR Reid said in an email that day. The spokesperson said Ford has a number of considerations and has not made any final decision about the planned investment in the project.  

Ford announced in February that it will invest $3.5 billion to build a lithium iron phosphate cells (LFP) factory in Michigan. This is the largest investment for a U.S. automaker to tap into the cheaper battery cell chemistry as LFP costs less than the nickel-and-cobalt combination widely used in North America and Europe. The factory, located in Marshall, a town about 100 miles west of Detroit, is expected to create about 2,500 jobs and open in 2026, with annual battery capacity to empower 400,000 electric vehicles (EVs).

Calling the plant a wholly-owned subsidiary, Ford said CATL will serve as its partner that provides technology and expertise. Ford executives said all the operations of the plant will be under control of the company and CALT employees will be stationed there. CATL later confirmed it has accepted invitation for cooperation from Ford. The Chinese EV battery giant would license CTP (cell to pack) technology to Ford and its workers shall help the new plant from construction to operation.

On March 15, the Michigan government approved a grant program to support battery plant projects, including a $210 million grant for Ford’s lithium iron phosphate plant and a $175 million grant for Gotion High-tech Co., Ltd., another Chinese battery company.

Amid mounting Sino-U.S. tensions, whether the cooperation between Ford and CATL will succeed has drawn much attention. On March 9, a U.S. senator proposed a ban on tax credits for batteries made with Chinese technology. A Ford spokesperson later said the company would own 100 percent of its battery plants in the U.S. and that Ford would be better off producing batteries domestically than relying entirely on imports. In the later of March, CATL said its project with Ford was in progress.  

The Inflation Reduction Act (IRA) was passed by U.S. Congress in August 2022 and one goal of the act was to encourage the development of electric vehicles. Under the bill, the U.S. government offers a tax credit of up to $7,500 to vehicles meeting various localized production conditions. Introduction of IRA has increased the uncertainty of CATL’s expansion in the United States as the law proposes the proportion of battery components, including positive and negative battery materials, electrolytes, produced locally in North America should reach 50% before 2024, and 60% in 2024. The proportion will increase year by year thereafter, reaching 100% by 2029. The bill also proposes that the proportion of key mineral raw materials (lithium, nickel, cobalt, manganese, etc.) locally mined and processed in North America should reach 40% before 2024, 50% in 2024, and 80% by 2027. These requirements are not without discrimination, and Chinese companies may be regarded as “sensitive entities” and excluded. Thus, CATL has to change its strategies in the U.S market.