(Bloomberg) -- Ford Motor Co. and Contemporary Amperex Technology Co. Ltd. plan to build a battery plant in Michigan, capping a months-long search that became mired in geopolitical tensions between the US and China.
The multibillion-dollar facility, to be located about 100 miles west of Detroit, is expected to create about 2,500 jobs, people familiar with the matter said, asking not to be identified because the full details aren’t yet public.
Ford is moving ahead with the project despite uncertainty around how the US Treasury Department will interpret requirements in President Joe Biden’s signature climate package — the Inflation Reduction Act. The law is designed to withhold consumer tax credits for EVs made with a certain amount of China-linked materials in their batteries.
“We’ve said that we’re exploring batteries based on CATL’s technology for Ford vehicles and that we plan to localize” production in North America, Ford said in an emailed statement.
Ford in China said that the automaker has “announced it’ll invest $3.5 billion to build a lithium iron phosphate battery plant in Marshall, Michigan. This will the first battery plant to be wholly owned by an American automaker and will introduce a lithium iron phosphate battery solution for Ford EV products.”
CATL, the world’s biggest maker of batteries for electric vehicles, said in a statement that it has “accepted Ford’s invitation for collaboration in Ford’s battery factory in Marshall, Michigan by providing services and knowledge for the construction and operation of the plant, which is a wholly owned subsidiary of Ford.”
CATL will “license its intellectual properties for battery technologies to Ford” and the two companies are “working together to provide the market with the most competitive products.”
Ford shares fell 5.6% in New York Friday to close at $12.73. They’re up 9.5% this year. CATL’s stock has risen 19% since January.
The US carmaker and CATL have been weighing a novel ownership structure under which Ford would own 100% of the plant, including the building and the infrastructure, Bloomberg reported last year. Ford workers would build the batteries, while CATL owns the technology to create the cells, according to the people familiar.
Such an arrangement may allow the facility to qualify for lucrative production tax credits under the Inflation Reduction Act while requiring no direct financial investment from CATL.
The site for the new factory, near the small town of Marshall in southwestern Michigan, has room to grow, potentially bringing more jobs and a larger investment, the people familiar said.
Read More: The Breakneck Rise of China’s Colossus of Electric-Car Batteries
The companies also considered Virginia as a possible home for the plant, Bloomberg previously reported. That option was nixed when Virginia Governor Glenn Youngkin, a potential Republican contender for the White House in 2024, yanked his state out of the competition, calling CATL a “Trojan horse” for China that would undermine policy efforts to strengthen the US auto industry. Macaulay Porter, press secretary for Youngkin, declined to comment Friday.
Michigan Governor Gretchen Whitmer has staked out a different position from her counterpart, calling Youngkin’s move “a political determination,” the Detroit News reported last month. Whitmer has been fighting to attract more EV battery investment after losing out to Tennessee and Kentucky on Ford’s historic $11.4 billion Blue Oval City investment in 2021.
Read more: Ford Jobs Cost $414,000 Apiece as Factory Fight Takes Off
Ford announced in July it will begin using less expensive lithium iron phosphate battery packs from CATL on its Mustang Mach-E models this year and F-150 Lightning pickups in early 2024, which will boost output of those popular vehicles. Ford has said it has a plan to source 40 gigawatt hours of those batteries annually in North America in 2026, but would initially import them from China.
Ford is investing $50 billion broadly to develop and build electric vehicles and plans to produce 2 million a year by the end of 2026. The Dearborn, Michigan-based automaker was the No. 2 seller of EVs in the US last year, well behind Tesla Inc., which controls almost two-thirds of the American market.
--With assistance from Craig Torres, Danny Lee and Linda Lew.
(Updates with Ford China statement in 5th paragraph.)
©2023 Bloomberg L.P.