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 electric car and battery factories that companies have announced in recent months. Ford expects to employ around 2,500 people at the plant and start production in 2026.
The automaker said it would own 100 percent of the plant and would 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 enthusiastically asking American automakers to bring their investments and expertise to China. Today, the roles are reversed, with one of America’s most storied industrial giants asking China for the technology it needs 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 chief executive, 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 spy balloon was sighted over Montana.
Two more unidentified objects were shot down late last week, one over the northern tip of Alaska and one over northern Canada. A fourth unidentified object was shot down Sunday over Lake Huron, off the eastern shore of Michigan.
The rise of electric vehicles
China accused the United States on Monday of sending high-altitude balloons through its airspace without permission more than 10 times since early last year.
The dispute over the balloons 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 politicians in the United States continue to mistrust China and Chinese investment.
Gov. Glenn Youngkin of Virginia, a Republican, withdrew his state’s bid for Ford’s venture with CATL last month. He described the planned project to Bloomberg Television on January 20 as a “Trojan horse” for the Communist Party of China.
Ford is trying to insulate itself from US-China tensions by opting to own the factory outright and only license technology from CATL, which supplies batteries to Tesla, BMW and other big automakers.
The company said its contract with CATL includes provisions to resolve difficulties between the two countries. “Of course we’ve thought about it,” Lisa Drake, Ford’s vice president of electric vehicle industrialization, said in a conference call with reporters, without disclosing further details.
Ford, General Motors and other automakers are building other battery plants that are jointly owned with 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 that are used in other batteries. LFP batteries also have the advantage of being longer lasting. But batteries containing cobalt and nickel contain more energy, allowing electric vehicles to go further before needing to be charged.
“The goal of this project is to reduce the cost of electric vehicles,” Ford CEO Jim Farley said. “LFP is the most affordable battery technology.”
Ford had considered building the factory in Canada and Mexico, but chose a site in the US after President Biden signed the Inflation Reduction Act into law last year. The law provided 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 US trading partner.
“This is why the IRA was passed,” Farley said, referring to the Marshall plant.
Ford’s decision is also a big win for Michigan. In the past two years, automakers have chosen the Southern states for more than half a dozen auto plants.
Ford said its plant could 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 in 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 rose 66 percent last year in the United States. Ford is the second largest seller of electric vehicles in the US after Tesla.
Ford said the vehicles with LFP batteries were better suited for commuting and local driving and could be quickly charged to 100 percent capacity. Batteries with cobalt and nickel are better for driving or towing long distances, but generally take longer to charge.
CATL has 100,000 employees worldwide, the majority in China, and has been the world’s largest supplier of electric car batteries for the past six years. One third of the electric cars now on the world’s roads use CATL batteries.
The company is little known outside of the automotive industry. Robin Zeng, the founder and CEO of CATL, created the company in 2011 in his hometown, a formerly 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 that strongly emphasizes math and science education. The transformation of the battery industry in Ningde has echoed the boom 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, driving property prices down to a tenth of those in cities like Beijing or Shanghai.
China almost completely closed its borders for nearly three years during the pandemic, preventing virtually all foreigners from entering the country and limiting the ability of Chinese citizens to exit. However, CATL negotiated global agreements during this time, and began producing lithium-ion battery cells in December in a factory in Germany.
CATL also recently opened an office in Detroit to promote its batteries. A huge map of CATL’s world operations on a museum wall 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 southwestern Wisconsin .
The manufacturing process of a lithium iron phosphate battery like the ones Ford will use was seen on 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 spools of the two types of foil, along with a third spool of very thin spacers, are used to wind alternating layers to form the core of each battery cell. The core is then clamped tight in a gray machine the size of a city bus.
A 10-foot-tall bright orange robot, like those used on auto assembly plant welding lines, picks up rows of battery cores and places them in a cold press to compress them. 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-yard-long room in which the batteries are made already stays much drier than even the Sahara.
After baking, the 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.
