Ford and CATL plan to build a battery production plant in Michigan but may have to go into a complex ownership structure to avoid violating their respective country’s trade policies.
The multi-billion dollar plant will provide lithium iron phosphate batteries for EVs made by Ford.
In the unusual arrangement, Ford will own 100 percent of the new plant while CATL will operate it. The Chinese company will also own the tech used to build the cells.
This ownership structure will allow Ford to qualify for tax incentives under the new Inflation Reduction Act, as reported by Bloomberg.
It will also remove the need for direct investment by CATL in the venture. The Chinese government has discouraged CATL from investing in the US following economic tensions between the two countries.
Meanwhile, the plans have not been finalized as there is a lack of clarity around some parts of the Inflation Reduction Act. Ford is said to be still considering sites in Mexico and Canada.
The two companies reportedly discussed battery supply to Ford’s Ontario EV plant earlier this year.
There have been mixed reactions to the new development. CATL’s shares rose 5.3 percent, while Ford’s dropped 2.2 percent. CATL, in a statement to Bloomberg, mentioned that China is not preventing it from investing in the US, contrary to reports.
CATL supplies Tesla. It announced a new battery with 430 miles driving range in September.