Ford's $3.5-Billion Battery Plant Deal With Chinese Firm CATL Draws US House Committee Investigations

The alliance between Ford Motor Co F and Contemporary Amperex Technology Co. Limited, CATL, has drawn the attention of two U.S. House of Representatives committees. The focal point of the investigation is Ford’s plan to construct a $3.5-billion battery facility in Michigan, utilizing CATL’s technology, a global leader in battery production.

What Happened: Reuters reports that the committees, chaired by Rep. Jason Smith (R-MO) and Rep. Mike Gallagher (R-WI), have expressed apprehension about the potential sway of the Chinese Communist Party over the U.S. automaker and its implications for U.S. taxpayers.

Ford has responded to the investigation by asserting its intention to maintain ownership and operation of the plant on U.S. soil, a strategy that contrasts with its competitors that import lithium iron phosphate batteries from China.

The House Ways and Means Committee and the Select Committee on China are questioning the several hundred positions at the Ford plant that would be occupied by CATL’s Chinese workforce, who would oversee equipment installation and maintenance. The probe also highlights that CATL seems to retain control over entities in Xinjiang that are linked to forced labor allegations while giving the impression of divesting its ownership.

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Last year, the U.S. Congress enacted the $430-billion Inflation Reduction Act, which could potentially disqualify EV tax credits for any EV battery components produced or assembled by a “foreign entity of concern.” Ford is currently seeking guidance from the U.S. Treasury to ensure its collaboration with CATL does not infringe upon this stipulation.

GOP Sen. Marco Rubio (R-FL) has also advocated for an examination of the deal and has proposed a bill to deny consumer tax credits for EVs manufactured using CATL’s technology.

The committees’ correspondence expressed apprehension that the agreement could enable the partial onshoring of PRC-controlled battery technology, raw materials, and workforce while amassing tax credits and rerouting funds back to CATL through the licensing contract.

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