Ford Motor to Set Up $3.5 Billion Plant to Make Low-Cost EV Batteries Using Chinese Technology

Ford Motor is investing $3.5 billion in a greenfield electric vehicle battery plant it is setting up in Michigan, and will have technology collaboration with a Chinese supplier, Contemporary Amperex Technology Co. Ltd (CATL).

The new facility will be a wholly owned subsidiary of Ford and it will start production in 2026. According to Ford the plant will create as many as 2,500 jobs.

Ford logo
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Ford Chairman Bill Ford said the collaboration with CATL will help the automaker speed up its efforts to build the batteries. "Manufacturing these new batteries in America will help us build more EVs faster and will ultimately make them more affordable for our customers," he said.

What's New?

Ford is currently using nickel cobalt manganese batteries in its electric vehicles. These batteries are costlier to make, thus making the electric vehicles lose out on price competitiveness. The upcoming Michigan plant with Chinese collaboration will make new lithium iron phosphate batteries (LFP). This, the company says will lower the EV costs and help the automaker increase profit margins.

Ford CEO Jim Farley underscored that the batteries made at the new plant will be among the cheapest to produce.

The remaining voltage of a used Lithium-ion car battery is checked before its dismantling by an employee of the German recycling firm Accurec in Krefeld, Germany November 16, 2017. Picture taken November 16, 2017. Reuters

LFP Technology

Ford officials said the company will license the technology from CATL. "The LFP technology is already here in the U.S. It's in a lot of consumer electronics devices, it's actually in another OEM product, but, unfortunately, it's always imported ...This project is aimed at de-risking that by actually building out the capacity and the capability to scale this technology in the United States, where Ford has control," said Lisa Drake, Ford's vice president of EV industrialization, according to CNBC.

Top executives at the automaker also said when production begins at the Michigan plant, the vehicles will qualify for half of the up to $7,500 federal tax incentives for consumers announced by the federal government.

CATL said on Tuesday it has accepted the offer of collaboration from Ford and will license its intellectual properties for battery technologies to the American automaker.

"We are working together to provide the market with the most competitive products. Such model of cooperation is about complementing and reinforcing each other for the industry leaders of CATL and Ford," the company told China Daily.