Ford recently announced plans for a $3.5 billion investment into a new battery plant in Marshall, Michigan using technology licensed from the Chinese battery giant CATL. The Ford factory will produce lithium iron phosphate (LFP) batteries, which are a cheaper alternative to the nickel cobalt manganese (NCM) the company already produces. The lower cost is expected to help lower EV costs to help with mainstream adoption.
The plant, named BlueOval Battery Park Michigan, won’t become operational until 2026. However, Ford will begin implementing the new battery chemistry almost immediately, installing the new batteries in the Mustang Mach-E later this year before they move to the F-150 Lightning starting in 2024. It’s thought the LFP will become Ford’s standard battery offering with NCM batteries offered as upgrades.
LFP battery chemistry uses fewer high-demand materials and offers more durability and faster charging times compared to NCM chemistry. Unfortunately, LFP batteries provide less energy, and less power, and are more susceptible to cold weather. Ford says its own internal data suggests 95 percent of Mach-E owners start their trips when ambient temperatures are above freezing with 32 miles being the median distance for daily travel. It’s unclear if the new battery chemistry will become standard in the Northern States and Canadian provinces where the cold weather deficiency will certainly have more impact.
FORD-CATL BATTERY PLANT IN MARSHALL, MICHIGAN: DETAILS
Set to go online in 2026, the new plant will offer Ford enough batteries to power approximately 400,000 EVs a year. It’s expected 2,500 new jobs will become available as well. It’s set to be the first LFP and NCM battery plant in the United States, and brings the company’s total investment in EV and battery production to $17.6 billion since 2019.
Officially named the BlueOval Battery Park Michigan site, it will include 950 acres and will be a part of a subsidiary wholly owned by Ford residing in Marshall Township, located in southern Michigan between the cities of Jackson to the east and Kalamazoo to the west. The automaker will own and operate the plant, including workforce management. It will license lithium phosphate (LFP) battery cell technology from CATL, along with additional services tied to LFP battery manufacturing.
Ford says it hopes to achieve an annual production rate of 600,000 EVs globally by the end of this year and hopes to be cranking out 2 million EVs by the time the new battery plant comes online in 2026. The automaker says it is committed to localizing and diversifying its EV supply chain in order to improve affordability and availability.
More cost effective electric vehicles, a couple thousand new jobs, and billions of dollars in investments. Seems like great news, yes? Well, since the announcement, the past few weeks has revealed a fair bit of controversy.
TOWN MEETING FOR NEW FORD-CATL BATTERY PLANT ENDS IN ARREST
The bad press for Ford’s $3.5 billion BlueOval Battery Park Michigan is happening at both the local and federal level. First, it was members of the U.S. government who questioned if the plan was an overt attempt to circumvent the Inflation Reduction Act and its strict policy regarding Chinese content in American-built electric vehicles. Then Chinese officials shot back concerns regarding the transfer of intellectual property from homegrown CATL, the world’s leading battery producer. Now it’s residents of Marshall itself who are expressing their displeasure with the deal.
A recent public meeting, which saw the township board vote to transfer more land to the city for the development of BlueOval Battery Park Michigan, became quite heated, including at least one arrest. According to The Detroit News, four properties were approved for transfer in order to gain access to water and sewer infrastructure needed for Ford’s battery plant development. At least 20 people delivered speeches against the project and one man was arrested after continued efforts to disrupt the meeting.
The meeting saw residents from Marshall Township, neighboring townships, and other nearby communities speak against Ford’s battery plant with concerns about losing farmland to the development of both the plant and the inevitable suburban sprawl that comes from 2,500 jobs being added to an area. Other top-shelf concerns included the environmental effects of a battery manufacturing plant and the facility’s connections to the Chinese government.
For its part, the automaker promises that 245 acres at the southern edge of the development site will be placed into a conservation easement. Stephanie Fries, Ford’s regional manager of government relations, told residents there will be more community meetings.
Residents were also assured there won’t be any foreign investment in BlueOval Battery Park Michigan. The land will be entirely owned by Ford, and most importantly, the government of China will (officially) have no role in the project.
However, that hasn’t stopped some Chinese officials from voicing concern over the Ford-CATL battery plant joint venture.
RURAL MICHIGAN RESIDENTS AND CHINESE OFFICIALS SEEM TO AGREE ON SOMETHING
Days after American politicians and Marshall, Michigan residents criticized Ford’s new $3.5 billion Michigan battery plant, officials from China are echoing the same sentiment. This comes amid ongoing tensions between Washington and Beijing, with Ford being caught in the crosshairs. Not unlike those spy balloons.
Ford has said that the agreement will help it get up to speed on LFP chemistry which will then allow the automaker to build the batteries itself. And that appears to be going against Chinese interests.
According to a report from Bloomberg, senior Chinese officials are now concerned Ford could unfairly benefit from CATL’s experience. The CCP (Chinese Communist Party) plans to scrutinize the deal in order to ensure the Chinese battery giant’s core technology isn’t handed over. The posturing is somewhat funny because that’s how licensing works, money in exchange for expertise.
There’s schizophrenia at play here, while Beijing is pleased to show off China’s strong leadership in the battery space, they also don’t want to give up its competitive edge and allow too much knowledge to be shared with the Americans.
Last week, U.S. Senator Marco Rubio called for the Biden administration to review the deal. Rubio said Ford’s deal “will only deepen U.S. reliance on the Chinese Communist Party for battery tech, and is likely designed to make the factory eligible for Inflation Reduction Act (IRA) tax credits.” American officials are worried the new deal could become a possible template for still securing tax advantages while benefiting from China’s battery prowess.
It doesn’t help America’s oldest automaker (and company with the largest manufacturing footprint in the USA) that scrutiny of the new battery plant comes hot on the heels of the company battling through multiple battery pack issues on its flagship F-150 Lightning all-electric pickup truck, including a fire, battery module failures, and a stop-production order.
At the moment, the only friend that Ford Motor Company seems to have in this announcement, besides CATL, are Democrats.
“Ford’s $3.5 billion investment creating 2,500 good-paying jobs in Marshall building electric vehicle batteries will build Michigan’s economic momentum,” said Michigan Governor Gretchen Whitmer (D). “Today’s generational investment by an iconic American company will uplift local families, small businesses, and the entire community and help our state continue leading the future of mobility and electrification. Let’s continue bringing the supply chain of electric vehicles, chips, and batteries home while creating thousands of good-paying jobs and revitalizing every region of our state. Since I took office, we’ve secured over 30,000 auto jobs and landed multiple electric vehicles and chip-making factories. We’re on the move, so let’s keep our foot on the accelerator.”
“This new battery plant will mean more good-paying Michigan jobs,” tweeted Senator Gary Peters, Michigan (D). “This is an example of how Michigan can lead in strengthening our supply chains & national security by making this technology here at home –– so we don’t need to import it from China.”
“When Democrats passed the Inflation Reduction Act, a new battery plant in Marshall was exactly what we had in mind,” tweeted Senator Debbie Stabenow, Michigan (D). “Today, so much of our work becomes a reality. It’s always a good idea to invest in American workers.”
This new battery plant will mean more good-paying Michigan jobs.
This is an example of how Michigan can lead in strengthening our supply chains & national security by making this technology here at home –– so we don’t need to import it from China.https://t.co/vM8XxYpec4
— Senator Gary Peters (@SenGaryPeters) February 13, 2023
When Democrats passed the Inflation Reduction Act, a new battery plant in Marshall was exactly what we had in mind. Today, so much of our work becomes a reality. It’s always a good idea to invest in American workers.
— Sen. Debbie Stabenow (@SenStabenow) February 13, 2023
AN AMERICA-FIRST MANUFACTURING PLAY
As part of the IRA (Inflation Reduction Act), electric cars made with a certain amount of China-linked materials will not qualify for lucrative consumer tax credits, spelling disaster for their retail sales potential. The IRA has not gone over well with many of the world’s top battery makers, including CATL which sits at the top of the list. Currently, China controls huge chunks of the battery material supply chain, meaning almost all EV production has to go through them to some degree.
Indeed, while the IRA is a double-speak that has nothing really to do with inflation, the spending and subsidies that were a part of the bill aim to but a crack in China’s stronghold of the battery supply chain sourcing, refining, and manufacturing processes.
President Biden and his cabinet have also been fairly vocal on the matter, with efforts going into studying the rare earth metal supply chain for batteries, the demand to localize manufacturing of key electronics components such as semiconductor microchips (which is happening), and supporting the opening of America’s first and only cobalt mine in Idaho.
In the short-term, however, it’s left the already sleep-deprived supply chain teams of electric vehicle makers looking for ways to respond to the legislation. Because building up a rare earth metal supply chain that prioritizes American-sourced materials will take years (if at all), and automakers are obligated to deliver on EV products in the here and now.
At the end of the day, all of this probably wouldn’t even be a scenario if governments weren’t forcing automakers to build electric vehicles in the first place.