Ford’s CATL Technology Deal: A Threat to U.S. Jobs and Inflation Reduction Act

Is Ford circumventing the spirit of the Inflation Reduction Act by exploiting a loophole to use CATL technology? It certainly seems possible.

Ford has recently struck a deal with China’s Contemporary Amperex Technology Co. Ltd. (CATL) to use its technology at a planned $3.5 billion battery plant located in Michigan. This could go against everything the new Inflation Reduction Act stands for. It seems a bit out of bounds that one of America’s largest domestic automakers would blatantly go against the spirit of this act to bring tech to its EVs from one of the most contentious foreign adversaries of the United States.

The goal is to cut out foreign influence

Much of the language in the Inflation Reduction Act is meant to cut out foreign adversaries, especially China, and focus on allies. Currently, China has a commanding lead in the EV world, including in the production of battery packs for its electric vehicles. Although the technology could be useful to Ford, this is the exact opposite of what the new bill was meant to create. The spirit of this new act was to bring more domestic technology and manufacturing to the electric vehicle market, and it doesn’t help if Ford is utilizing loopholes to get around the act.

A U.S. Representative calls Ford on the carpet

A congressperson from Missouri, Jason Smith, is calling to question the arrangement Ford has with CATL. He’s searching for clarification regarding the technology being used and how the project is structured. The Inflation Reduction Act calls for battery components to be manufactured and assembled by the United States and its allies, not opposing nations, including China and Russia. The structure of the project could see Ford taking advantage of loopholes that need to be closed to ensure the guardrails in place to protect American enterprise, and workers remain protected.

Will these new Ford batteries qualify for the EV Tax Credit?

Representative Smith is not only calling to question the arrangement between Ford and CATL but whether or not EVs with these batteries should qualify for the Federal EV Tax Credit. Additionally, he’s questioning whether or not Ford plans to claim tax credits for batteries made at this factory. These are important and understandable concerns that should be answered by Ford directly. The last thing Americans want to hear is that one of our own companies is leading the way against the spirit of the Inflation Reduction Act while entering an agreement with a Chinese company.

Tax dollars to Ford, is that enough?

Ford has openly stated the tax dollars granted for the EV batteries built at this new factory will only go to the Ford subsidiary and not to CATL or any other entity. Ford intends to pay CATL to license its battery cell technology, similar to an external contractor. Does this sound like enough of an explanation as to why Ford is exploiting a loophole in the Inflation Reduction Act? If this partnership moves forward, Ford will be building EV batteries at a new plant in Michigan utilizing Chinese technology.

Shouldn’t Ford invest in local tech and development?

This new act is meant to make it more attractive for automakers to invest in the U.S. instead of making or buying batteries from other countries. Although utilizing the CATL technology could make Ford EVs more affordable to more customers, it seems that signing any agreement with one of the largest Chinese EV automakers could be a move that goes completely against the expectations set forth in this new bill. The goal was to have automakers invest wholly in developing their EV batteries and vehicles locally, but that’s not the case with this new partnership.

Are other automakers doing the same?

Representative Smith is seeking answers from other large automakers that have factories in the United States and expect to receive credits for EVs and battery development. He sent separate letters to Audi, BMW, GM, Hyundai, Nissan, Rivian, Stellantis, Tesla, Volkswagen, and Volvo to learn whether or not these automakers are also using similar loopholes in the Inflation Reduction Act. These loopholes would remove the protections necessary to keep American workers secure.

The strict regulations regarding new EV technology continues to become stricter and require higher percentages of materials, technology, and manufacturing to be sourced or completed in the United States or a local ally.

The most damning aspect of Ford exploiting the loophole in the Inflation Reduction Act is the use of a Chinese company. China is one of the most contentious foreign adversaries, which puts a huge black eye on this partnership.