For executives on both sides of the Pacific, Ford Motor Co.’s controversial deal to build a $3.5 billion electric-vehicle battery plant in Michigan using Chinese technology was the finale of a high-wire act that began two years ago.
When Ford and China’s Contemporary Amperex Technology Co. Ltd. first began talking in early 2021 about building batteries together in North America, a political firestorm seemed like a distant prospect, according to people familiar with the negotiations.
That soon changed.
U.S. House Speaker Nancy Pelosi’s trip to Taiwan last year kicked off a diplomatic clash that caused a delay in announcing the plant. An escalating trade war didn’t help matters. Now, the pact is drawing scrutiny from government officials in the US and China as an alleged spy balloon inflames tensions between the two countries.
But the deal’s carefully negotiated framework — Ford will own and operate the plant, while CATL will license its technology without taking an equity stake — provides a blueprint for Chinese companies seeking to profit from America’s rush into battery power, and possibly for other U.S. automakers looking to boost EV output.
Navigating geopolitical disputes will be crucial as century-old carmakers like Ford and General Motors scramble to catch up with Tesla Inc. In the fast-growing market for plug-in vehicles, batteries have become a key battleground — and Ford and its rivals need China’s technology. Just two Chinese companies — Tesla supplier CATL and rival BYD Co. — account for more than half of the world’s EV battery production.
“The deal has already set a precedent,” Tu Le, managing director of China and U.S.-based advisory firm Sino Auto Insights, said in an interview. “For the second or third Chinese company to come in, it’s not going to be as shocking.”