Ford Motor said Monday it planned to build a $3.5 billion electric vehicle battery factory in Michigan using technology licensed from a Chinese company that has become one of the biggest players in the auto industry.
The plant, to be built in Marshall, a rural town about 100 miles west of Detroit, will be the latest in a growing list of new battery and electric car factories the companies have announced in recent months. Ford expects to employ about 2,500 people at the plant and start production in 2026.
The automaker said it would own 100 percent of the plant and manufacture battery cells using technology and services from Contemporary Amperex Technology Limited, known as CATL. The company, the world’s largest producer of batteries for electric vehicles, has 13 factories of its own in Europe and Asia, but none in the United States.
Just a quarter of a century ago, Chinese officials were eagerly asking American automakers to bring their investments and expertise to China. Today, the roles are reversed, with one of America’s most recognized industrial giants looking to China for the technology needed to survive in a rapidly changing global automotive landscape.
“This will help us build more electric vehicles faster,” William Clay Ford Jr., the company’s executive chairman, said Monday. He added that CATL would “help us catch up so we can build the batteries ourselves.”
The alliance comes at a time of considerable tension between Washington and Beijing, after the United States shot down a Chinese surveillance balloon off the coast of South Carolina on February 4. Secretary of State Antony J. Blinken abruptly canceled a trip to Beijing after the A spy balloon was seen over Montana.
Two more unidentified objects were shot down late last week, one in northern Alaska and one in northern Canada. A fourth unidentified object was shot down over Lake Huron on Michigan’s eastern shore on Sunday.
The rise of electric vehicles
China accused the United States on Monday of sending high-altitude balloons over its airspace without permission more than 10 times since the beginning of last year.
The balloon dispute appears to have disrupted China’s efforts to attract more foreign investment after it ended nearly three years of “zero Covid” policies and began reopening its borders. Many US politicians remain wary of China and Chinese investment.
Gov. Glenn Youngkin of Virginia, a Republican, last month withdrew his state’s bid for Ford’s venture with CATL. He described the planned project on Bloomberg Television on January 20 as a “Trojan horse” for the Chinese Communist Party.
Ford wants to insulate itself from tensions between the United States and China by choosing to own the factory outright and only license technology from CATL, which supplies batteries to Tesla, BMW and other major automakers.
The company said its contract with CATL includes provisions to overcome difficulties arising between the two countries. “Of course we’ve thought about it,” Lisa Drake, Ford’s vice president of electric vehicle industrialization, said on a conference call with reporters, without elaborating.
Ford, General Motors and other automakers are building other 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. GM 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.
Ford’s new plant will produce batteries that include lithium, iron and phosphate, a combination known as LFP. These batteries are less expensive because they do not include expensive ingredients like cobalt and nickel used in other batteries. LFP batteries also have the advantage of being longer lasting. But batteries containing cobalt and nickel hold more energy, allowing electric vehicles to go farther before they need to be charged.
“The goal of this project is to reduce the cost of electric vehicles,” said Ford CEO Jim Farley. “LFP is the most affordable battery technology.”
Ford had considered building the factory in Canada and Mexico, but chose a site in the United States after the Inflation Reduction Act was signed into law last year by President Biden. The law provided tax incentives to companies that build battery factories in the United States. Car buyers are also entitled to tax credits for electric vehicles made in North America that include batteries and raw materials from the region or another US trading ally.
“This is the reason the IRA was passed,” Farley said, referring to the Marshall plant.
Ford’s decision is also a big win for Michigan. Over the past two years, automakers have chosen the southern states for more than half a dozen auto plants.
Ford said its plant would be able to produce enough batteries for 400,000 electric vehicles a year. The company plans to use 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.
All automakers are trying to produce more electric vehicles, sales of which jumped 66 percent last year in the United States. Ford is the second largest seller of electric vehicles in the US after Tesla.
Ford said vehicles with LFP batteries were better suited for commuting and local driving and could be charged to 100 percent capacity quickly. Cobalt and nickel batteries are better for long-range driving or towing, but generally take longer to charge.
CATL has 100,000 employees worldwide, most of them in China, and has been the world’s largest supplier of electric car batteries for the past six years. A third of the electric cars now on the road around the world use CATL batteries.
The company is little known outside the automotive industry. Robin Zeng, the founder and CEO of CATL, started the company in 2011 in his hometown, a previously impoverished area of fishing and rice paddy villages on the northern outskirts of Ningde, a city halfway between Shanghai and Hong Kong .
CATL has hired thousands of engineers at low cost in a country that places a heavy emphasis on math and science education. The transformation of Ningde’s battery industry has echoed the boom that Detroit and the Midwest experienced during the heyday of the US auto industry.
CATL has a third of its workforce in Ningde, including many of its blue-collar workers. Rows of high-rise apartments have been built, reducing real estate prices to a tenth of those in cities like Beijing or Shanghai.
China almost completely closed its borders for nearly three years during the pandemic, barring virtually all foreigners from entering the country and limiting Chinese nationals from leaving. However, CATL negotiated global deals during that time and began producing lithium-ion battery cells in December at a factory in Germany.
CATL also recently opened an office in Detroit to promote its batteries. A large map of CATL’s world operations on the wall of a museum in the lobby of its headquarters has a recently added dot for the Detroit office, except that the dot had been mistakenly placed in what appeared to be be southwest Wisconsin.
The manufacturing process for a lithium iron phosphate battery like the ones Ford will use was on display Sunday during a rare tour inside a cavernous CATL factory in Ningde.
The process begins with rolls of metal foil one-tenth the thickness of a human hair. Aluminum foil is coated with an extremely thin layer of lithium, iron and phosphate, while copper foil is coated with an extremely thin layer of graphite. Large coils of both types of foils, along with a third coil of very thin spacers, are used to wind alternating layers together to form the core of each battery cell. The core is then clamped tightly into a gray machine the size of a city bus.
A 10-foot-tall bright orange robot, like those used on the welding lines of auto assembly plants, picks up rows of battery cores and puts them into a cold press for compression. The cores then go through an oven that heats them to 105 degrees Celsius (221 degrees Fahrenheit) to remove any traces of water. The 300-meter-long room in which the batteries are made already remains much drier even than the Sahara.
After baking, liquid electrolyte (lithium salts with a solvent) is injected twice into each battery as an electrolyte. The batteries are then hermetically sealed for delivery to customers.
