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U.S. Lawmakers Call for Review of Ford's Agreement with CATL for EV Battery Plant
Lawmakers Request Review of Licensing Agreement and Communication
Lawmakers in the United States are calling for a review of the licensing deal between Ford and CATL, a China-based battery supplier, as the automaker plans to open a $3.5 billion electric-vehicle battery plant in Michigan. The House Select Committee on the Chinese Communist Party and the House Ways and Means Committee have demanded Ford provide a copy of the licensing agreement and any communication related to the deal. They also have concerns about the number of American vs. Chinese workers at the plant, the eligibility for federal tax funding, CATL's connections to forced labor practices, and the impact on the country's reliance on China for EV parts and materials.
New Michigan Plant to Employ 2,500 People with LFP Battery Production
Ford's new plant in Michigan is set to open in 2026 and employ about 2,500 people. The plant will produce lithium iron phosphate (LFP) batteries, which offer different benefits at a lower cost compared to the nickel cobalt manganese batteries the company currently uses. By using LFP batteries, Ford aims to increase EV production and improve profit margins. This move follows Tesla, which also uses LFP batteries in some of its vehicles to reduce the need for cobalt in battery production.
Concerns Over CATL Employees and Federal Incentives
According to a letter from lawmakers, several hundred of the jobs at the proposed Ford plant will be staffed by CATL employees from China until the licensing agreement expires in 2038. However, Ford defends the deal, stating that the plant will create thousands of U.S. jobs. The company also expects the battery cells produced at the plant to qualify for federal incentives under the Biden administration's Inflation Reduction Act, which offers credits for domestically produced battery cells.
Criticism from Republican Lawmakers
The agreement between Ford and CATL has faced criticism from Republican lawmakers such as Sen. Marco Rubio and Rep. Jason Smith. Smith, who chairs the House Ways and Means Committee, cosigned a letter calling for a review of the deal. Lawmakers question why American businesses would want to partner with Chinese companies given the Chinese Communist Party's alleged human rights abuses and military campaigns.
Reviewing Previous Responses and Concerns About CATL's Ties to Forced Labor
Rep. Jason Smith sent a letter to Ford CEO Jim Farley in April seeking information about the agreement with CATL, but the response did not satisfy the committee's request for detailed information. Concerns are also raised about CATL's ties to Xinjiang Lithium, a company that has connections to state-sponsored labor transfer programs in the Xinjiang region. Lawmakers are concerned about the treatment of laborers in these programs, including constant surveillance and transfer from camps to factories.
In conclusion, the review of Ford's agreement with CATL for the EV battery plant has sparked significant concerns among lawmakers in the United States. The request for a review stems from worries about the licensing agreement, the employment of Chinese workers, eligibility for federal tax funding, CATL's alleged ties to forced labor practices, and the potential impact on the country's reliance on China for EV parts and materials.
Ford's new plant in Michigan, set to open in 2026, is expected to employ about 2,500 people and focus on lithium iron phosphate (LFP) battery production. By adopting LFP batteries, Ford aims to increase EV production and improve profit margins, echoing Tesla's move to reduce the need for cobalt in battery production.
However, the employment of CATL workers from China until 2038, as stated in the licensing agreement, has raised concerns. Ford defends the deal by emphasizing the creation of thousands of U.S. jobs and the expectation that the battery cells produced at the plant will qualify for federal incentives.
Criticism from Republican lawmakers highlights the broader debate on American businesses partnering with Chinese companies, given the Chinese Communist Party's alleged human rights abuses and military campaigns.
The concerns around CATL's ties to forced labor, particularly through its connection to Xinjiang Lithium, intensify worries about labor treatment, including constant surveillance and transfer from camps to factories.
These developments not only impact Ford and CATL but also underscore the complex dynamics between international business partnerships, domestic employment considerations, human rights concerns, and national security. It remains to be seen how the review and subsequent actions will shape the future of Ford's agreement with CATL and its impact on the broader EV industry in the United States.
Article First Published at: https://www.cnbc.com/2023/07/21/lawmakers-probe-ford-partnership-with-chinese-battery-supplier-catl.html