Ford Motor Co. and China’s Contemporary Amperex Technology Co. Ltd. are considering building a battery manufacturing plant in Michigan in a complex arrangement designed to reap new tax benefits without running afoul of U.S.-China political sensitivities.
The state has emerged along with Virginia as a potential home of the multibillion-dollar facility, according to people familiar with the matter, who asked not to be identified discussing sensitive negotiations. The factory will provide lithium iron phosphate batteries for Ford’s electric models.
The companies are weighing a novel ownership structure under which Ford would own 100 percent of the plant, including the building and the infrastructure, while CATL would operate the factory and own the technology to build the cells, the people said. Such an arrangement would let the facility qualify for lucrative production tax credits under the new Inflation Reduction Act while requiring no direct financial investment from CATL.
The Chinese government has discouraged CATL from investing in the U.S. due to tensions with Beijing’s top geopolitical rival, according to the people. The battery maker paused plans this summer to establish a new facility in North America after House Speaker Nancy Pelosi’s trip to Taiwan further strained relations between the superpowers, Bloomberg reported in August.
The proposal is just one option that has emerged since the IRA was signed into law in August, and it’s still far from being a done deal, the people said. The lack of clarity around specific content requirements in the IRA is also impacting the decision, and sites in Mexico and Canada haven’t been ruled out.