Ford put on hold its $3.5 billion investment to build an EV battery plant in Michigan where their Chinese partner, the world’s largest EV battery maker, CATL, would be setting up shop. It’s likely Capitol Hill had a lot to do with it — including pressure from key lawmakers given CATL’s ties to the Chinese Communist Party (CCP) and Beijing’s use of forced labor.
Ford was on the receiving end of Inflation Reduction Act (IRA) benefits designed to help the U.S. move beyond gasoline-powered cars. They picked CATL as their battery manufacturer in February. Ford did not give a reason for the pause. There are no press releases about it. The news first appeared in The Detroit News with Ford spokesman T.R. Reid only saying a “number of considerations” were at play in the company’s business decision and that Ford was “pausing work and limiting spending on construction on the Marshall project until we’re confident that we’ll be able to competitively operate the plant.” The news went viral on Monday.
Reid did not say whether the United Auto Workers’ strike was a factor, nor if China was a factor. However, the paper said that the pause comes amid months of battles with local residents, and inquiries about the deal coming from Republican lawmakers.
CATL in the Crosshairs
Sen. Marco Rubio (R-FL) was the leader on this issue, arguing that if Ford was getting tax breaks to build an EV battery plant, they should not be partnering with China, an indirect beneficiary of the IRA in that case. Rubio, the top Republican on the Senate Intelligence Committee, wrote to Treasury Secretary Janet Yellen, Energy Secretary Jennifer Granholm and Transportation Secretary Pete Buttigieg back in February calling for an immediate Committee on Foreign Investment in the United States (CFIUS) review of the Ford CATL deal.
In March, Rubio introduced legislation called the “Restricting Electric Vehicle Outlays from Kleptomaniac Enemies Act of 2023” (aka the REVOKE Act S.756) that would ban tax credits for any EV battery project if the batteries were manufactured by a “foreign entity of concern.” At the time, Rubio said the CATL deal would “deepen U.S. reliance on the Chinese Communist Party for battery tech.” The bill is still in the Senate Finance Committee, chaired by Ron Wyden (D-OR) who tends to be very hawkish on China, but is a big proponent of the IRA and getting more renewable energy investments into the United States. It’s a real Catch-22 in Washington.
Rubio has allies in Congress.
In July, Rep. Mike Gallagher (R-WI-8), Chairman of the House Select Committee on the Chinese Communist Party, and Rep. Jason Smith (R-MO-8), Chairman of the Ways and Means Committee, sent a letter to Ford CEO Jim Farley highlighting serious concerns with Ford’s deal with CATL. They asked if any of the raw materials that will be used in the batteries can be guaranteed free of forced labor, and what manufacturing will be done in the U.S. versus China.
A House Select Committee investigation this summer found that shortly following the February announcement of the Ford-CATL licensing agreement, CATL sold a 23.6% ownership stake in Xinjiang Zhicun Lithium and within 48 hours, a majority stake (61.2%) of that same company was purchased by a limited partnership managed by a former senior manager of CATL. The move was likely designed to strip CATL of any ties to Xinjiang, the far western China province subject to numerous sanctions.
“We’re encouraged to see Ford take a crucial first step to reevaluate its deal with CATL. CATL’s deep ties to CCP forced labor have no place in the American market and make the company exceptionally unfit to receive American taxpayer dollars. Ford needs to call off this deal for good.” – Rep. Mike Gallagher, Chairman of the House Select Committee on the CCP, from a Sept. 25 statement.
“Ford’s deal with CATL raises concerns about their ties to the Chinese Communist Party & America’s dependence on Chinese technology,” said Chairman Jason Smith.
The dependence part of the argument is pertinent.
China companies account for six of the top 10 EV battery manufacturers in the world, according to South Korean business intelligence firm SNE Research. The others are Japanese and South Korean. None are American. There are simply no U.S. EV battery companies that can compete at scale with the Asians. And China is muscling in on the biggest names in the business – LG Energy Solutions and Panasonic. Tesla partners with Panasonic to make its car batteries for the U.S. market, but CATL is their China partner for the Chinese market, which also gets exported to Europe.
CATL competitor, Gotion High-Tech, is building two factories in the United States: one in Illinois and one in Michigan to take advantage of the IRA tax credits. Gotion has an R&D center in Freemont, CA, a Silicon Valley town.
Global automaker Stellantis – part of the old Dodge-Chrysler/Fiat merger – said in 2021 that they were partnering with top 10 Chinese EV producer SVOLT for their new cobalt-free batteries. SVOLT is a subsidiary of Great Wall Motors, one of China’s leading automotive producers.
China has become a lightning rod when it comes to the IRA. At least six Chinese multinationals will be direct or indirect beneficiaries of IRA funding, including Gotion High-Tech in Illinois and Michigan, and four new solar manufacturing plants announced in Ohio (LONGi), Arizona (JA Solar) and Texas (Trina Solar and Canadian Solar, which manufactures solar cells and modules in Asia).
Ford first tried to build the EV battery plant in Virginia. However, Governor Glenn Youngkin rejected the $3.5 billion investment, citing the geopolitical risks of doing business with China.
Congressman Gallagher of Wisconsin thinks Ford was unwise to contract CATL to build its EV batteries. He thinks the agreement should be scrapped. CPA agrees.
“Made in Virginia cannot be a front for the Chinese Communist Party,” Youngkin said. “We thought it was the right thing to do not to help Ford become a front for China here,” Youngkin added, calling the CATL plant a Trojan Horse investment.
The Republicans are the main ones picking on government funding for Chinese companies. For IRA benefits, these companies are already top line players in the market and have access to a myriad of subsidies back home.
Other laws, like the CHIPS & Science Act, concern some on Capitol Hill who worry that China will be contracted by American semiconductor companies or universities to do government-funded R&D.
To set some landmines down to thwart such action, Reps. Bill Posey (R-FL-08) and Brandon Williams (R-NY-22) introduced the Stop Funding Our Adversaries’ Research Act on Tuesday. This bill seeks to deny federal research funds going to countries of concern, which includes China.
“The current system to protect American innovation has several loopholes that allow adversarial countries like China to participate in taxpayer-funded research initiatives and take the findings which may later be used against the United States and our interests,” said Posey. “There is no transparency and accountability for how taxpayer dollars are spent.”
Last year, the Government Accountability Office (GAO) published a report on federal research that shows how much government research institutes collaborate with China. The GAO discovered millions of federal research funds went directly to Chinese entities and an undetermined amount indirectly. The full amount is “not known” because of limitations with reporting requirements.
CPA: Ford Should Cancel Deal with China’s CATL
Washington Likely Reason For Ford’s Pause On CATL EV Battery Factory
Ford put on hold its $3.5 billion investment to build an EV battery plant in Michigan where their Chinese partner, the world’s largest EV battery maker, CATL, would be setting up shop. It’s likely Capitol Hill had a lot to do with it — including pressure from key lawmakers given CATL’s ties to the Chinese Communist Party (CCP) and Beijing’s use of forced labor.
Ford was on the receiving end of Inflation Reduction Act (IRA) benefits designed to help the U.S. move beyond gasoline-powered cars. They picked CATL as their battery manufacturer in February. Ford did not give a reason for the pause. There are no press releases about it. The news first appeared in The Detroit News with Ford spokesman T.R. Reid only saying a “number of considerations” were at play in the company’s business decision and that Ford was “pausing work and limiting spending on construction on the Marshall project until we’re confident that we’ll be able to competitively operate the plant.” The news went viral on Monday.
Reid did not say whether the United Auto Workers’ strike was a factor, nor if China was a factor. However, the paper said that the pause comes amid months of battles with local residents, and inquiries about the deal coming from Republican lawmakers.
CATL in the Crosshairs
In March, Rubio introduced legislation called the “Restricting Electric Vehicle Outlays from Kleptomaniac Enemies Act of 2023” (aka the REVOKE Act S.756) that would ban tax credits for any EV battery project if the batteries were manufactured by a “foreign entity of concern.” At the time, Rubio said the CATL deal would “deepen U.S. reliance on the Chinese Communist Party for battery tech.” The bill is still in the Senate Finance Committee, chaired by Ron Wyden (D-OR) who tends to be very hawkish on China, but is a big proponent of the IRA and getting more renewable energy investments into the United States. It’s a real Catch-22 in Washington.
Rubio has allies in Congress.
In July, Rep. Mike Gallagher (R-WI-8), Chairman of the House Select Committee on the Chinese Communist Party, and Rep. Jason Smith (R-MO-8), Chairman of the Ways and Means Committee, sent a letter to Ford CEO Jim Farley highlighting serious concerns with Ford’s deal with CATL. They asked if any of the raw materials that will be used in the batteries can be guaranteed free of forced labor, and what manufacturing will be done in the U.S. versus China.
A House Select Committee investigation this summer found that shortly following the February announcement of the Ford-CATL licensing agreement, CATL sold a 23.6% ownership stake in Xinjiang Zhicun Lithium and within 48 hours, a majority stake (61.2%) of that same company was purchased by a limited partnership managed by a former senior manager of CATL. The move was likely designed to strip CATL of any ties to Xinjiang, the far western China province subject to numerous sanctions.
“Ford’s deal with CATL raises concerns about their ties to the Chinese Communist Party & America’s dependence on Chinese technology,” said Chairman Jason Smith.
The dependence part of the argument is pertinent.
China companies account for six of the top 10 EV battery manufacturers in the world, according to South Korean business intelligence firm SNE Research. The others are Japanese and South Korean. None are American. There are simply no U.S. EV battery companies that can compete at scale with the Asians. And China is muscling in on the biggest names in the business – LG Energy Solutions and Panasonic. Tesla partners with Panasonic to make its car batteries for the U.S. market, but CATL is their China partner for the Chinese market, which also gets exported to Europe.
CATL competitor, Gotion High-Tech, is building two factories in the United States: one in Illinois and one in Michigan to take advantage of the IRA tax credits. Gotion has an R&D center in Freemont, CA, a Silicon Valley town.
Global automaker Stellantis – part of the old Dodge-Chrysler/Fiat merger – said in 2021 that they were partnering with top 10 Chinese EV producer SVOLT for their new cobalt-free batteries. SVOLT is a subsidiary of Great Wall Motors, one of China’s leading automotive producers.
Ford first tried to build the EV battery plant in Virginia. However, Governor Glenn Youngkin rejected the $3.5 billion investment, citing the geopolitical risks of doing business with China.
Congressman Gallagher of Wisconsin thinks Ford was unwise to contract CATL to build its EV batteries. He thinks the agreement should be scrapped. CPA agrees.
“Made in Virginia cannot be a front for the Chinese Communist Party,” Youngkin said. “We thought it was the right thing to do not to help Ford become a front for China here,” Youngkin added, calling the CATL plant a Trojan Horse investment.
The Republicans are the main ones picking on government funding for Chinese companies. For IRA benefits, these companies are already top line players in the market and have access to a myriad of subsidies back home.
Other laws, like the CHIPS & Science Act, concern some on Capitol Hill who worry that China will be contracted by American semiconductor companies or universities to do government-funded R&D.
To set some landmines down to thwart such action, Reps. Bill Posey (R-FL-08) and Brandon Williams (R-NY-22) introduced the Stop Funding Our Adversaries’ Research Act on Tuesday. This bill seeks to deny federal research funds going to countries of concern, which includes China.
“The current system to protect American innovation has several loopholes that allow adversarial countries like China to participate in taxpayer-funded research initiatives and take the findings which may later be used against the United States and our interests,” said Posey. “There is no transparency and accountability for how taxpayer dollars are spent.”
Last year, the Government Accountability Office (GAO) published a report on federal research that shows how much government research institutes collaborate with China. The GAO discovered millions of federal research funds went directly to Chinese entities and an undetermined amount indirectly. The full amount is “not known” because of limitations with reporting requirements.
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