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Ford will build a battery factory in the United States with Chinese technology

Ford will build a battery factory in the United States with Chinese technology

Ford will build a battery factory in the United States with Chinese technology

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Ford Motor said on Monday it plans to build a $3.5 billion electric vehicle battery plant in Michigan using technology licensed from a Chinese company that has become one of the biggest players of the automotive industry.

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The plant, which will 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 that the companies have announced in recent months. Ford plans to employ around 2,500 people at the plant and begin production in 2026.

The automaker said it would own 100% 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 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 investment and expertise to China. Now the roles are reversed, with one of America’s most reputable industrial giants asking China for the technology needed to survive in a rapidly changing global automotive landscape.

“It 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 upgrade 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 spy balloon was sighted over Montana.

Two other unidentified objects were shot down late last week, one over extreme northern Alaska and another over northern Canada. A fourth unidentified object was shot down over Lake Huron off the eastern shore of Michigan on Sunday.

China on Monday accused the United States of sending high-altitude balloons into its airspace without permission more than 10 times since the start of last year.

The balloon dispute appears to have halted China’s efforts to attract more foreign investment after it ended nearly three years of “zero Covid” policies and began to reopen its borders. Many politicians in the United States remain wary of China and Chinese investment.

Governor Glenn Youngkin of Virginia, a Republican, last month withdrew his state’s bid for Ford’s venture with CATL. He described the planned project to Bloomberg Television on January 20 as a “Trojan horse” for the Chinese Communist Party.

Ford is seeking to insulate itself from US-China tensions by opting for sole ownership of the plant and only licensing 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 that arise between the two countries. “Of course we thought about it,” Lisa Drake, vice president of electric vehicle industrialization at Ford, said in a conference call with reporters, without disclosing further details.

Ford, General Motors and other automakers are building other jointly owned battery plants with Korean partners. Ford is building two battery plants in Kentucky and a third in Tennessee, both with SK On. GM recently began 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 containing lithium, iron and phosphate, a combination known as LFP. These batteries are less expensive because they don’t contain expensive ingredients like cobalt and nickel used in other batteries. LFP batteries also have the advantage of being more durable. But batteries containing cobalt and nickel contain more energy, allowing electric vehicles to go further before needing to be recharged.

“The goal of this project is to reduce the cost of electric vehicles,” Ford Chief Executive Jim Farley said. “LFP is the most affordable battery technology.”

Ford had considered building the plant in Canada and Mexico, but chose a US site after President Biden signed the Inflation Reduction Act into law last year. The law offered tax incentives to companies that build battery factories in the United States. Car buyers are also eligible for tax credits for electric vehicles made in North America that include batteries and raw materials from the region or another U.S. trading ally.

“That’s why the IRA was passed,” Mr Farley said, referring to the Marshall factory.

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 the LFP batteries in its Mustang Mach-E, a sport utility vehicle, and the F-150 Lighting, 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% last year in the United States. Ford is the second largest seller of electric vehicles in the United States after Tesla.

Ford said vehicles equipped with LFP batteries are better suited to daily commuting and local driving and can be charged up to 100% capacity quickly. Cobalt and nickel batteries are better for long distance driving or towing, but generally take longer to charge.

CATL has 100,000 employees worldwide, mostly in China, and has been the world’s largest supplier of electric car batteries for six years. A third of the electric cars currently in circulation in the world use CATL batteries.

The company is little known outside the automotive industry. Robin Zeng, the founder and managing director of CATL, established the company in 2011 in his hometown, a once impoverished area of ​​fishing villages and rice paddies 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 with a strong emphasis on teaching math and science. The transformation of the battery industry in Ningde echoed the boom that Detroit and the Midwest experienced during the heyday of the American 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, keeping house prices to a tenth of those in cities like Beijing or Shanghai.

China has almost completely closed its borders for nearly three years during the pandemic, barring virtually all foreigners from entering the country and limiting the ability of Chinese nationals to exit. CATL nevertheless negotiated global agreements during this period and began producing lithium-ion battery cells in December at a plant in Germany.

CATL also recently opened an office in Detroit to promote its batteries. A huge map of CATL’s global operations on the wall of a museum in the lobby of its headquarters has a point recently added for the Detroit office – except the point was mistakenly placed in what appeared to be the southwest of Wisconsin.

The process of making a lithium iron phosphate battery like the ones Ford will use could be seen on Sunday during a rare visit inside a cavernous CATL factory in Ningde.

The process begins with rolls of sheet metal 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 foil, along with a third coil of very fine 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 in car assembly plant welding lines, picks up rows of battery cores and puts them into a cold press for compression. The cores then pass through an oven which heats them to 105 degrees Celsius (221 degrees Fahrenheit) to remove all traces of water. The 300 meter long hall in which the batteries are manufactured is already much drier than even the Sahara.

After baking, a liquid electrolyte – lithium salts with a solvent – is injected twice into each battery as the electrolyte. The batteries are then hermetically sealed for delivery to customers.

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