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Ford plans to make EV batteries in U.S. with Chinese company that developed the tech

MARY LOUISE KELLY, HOST:

In the effort to shift to cleaner energy, U.S. automakers are facing a big challenge - getting batteries for electric vehicles. Most companies buy them from the world leader in batteries. That would be China. But Ford has come up with a twist. It plans to produce batteries in the U.S. through a licensing agreement with the Chinese company that developed them. That is raising red flags in Washington. NPR's Jackie Northam has this report.

JACKIE NORTHAM, BYLINE: The world's automobile makers are shifting to electric vehicles. In an effort to compete for market share, Ford is trying to produce an efficient, reasonably priced component that's critical to the EV - the battery. In this company video, a Ford executive talks about the batteries used in its fleet of electric vehicles.

(SOUNDBITE OF ARCHIVED RECORDING)

UNIDENTIFIED PERSON: Including a new battery chemistry coming this year that will help us make EVs more affordable and accessible.

NORTHAM: The new battery is called LFP, lithium iron phosphate. It'll be cheaper than the current one that's made with cobalt and nickel, more durable and have a shorter charging time. The thing is a Chinese company called CATL dominates global production of LFP batteries. It would take years for Ford to develop that technology. It could just buy those batteries in China like GM, BMW and others. But Ford wants to make its own, so it's entered into a licensing agreement with CATL. Scott Kennedy, a China specialist at the Center for Strategic and International Studies, says it's a smart move.

SCOTT KENNEDY: It's a decision that makes entirely reasonable business sense given that Ford doesn't have a lot of other good alternatives to obtain this technology and that it is behind in the race to electrify its fleet and needs to catch up.

NORTHAM: Ford is planning to build a $3.5 billion factory to produce the LFP batteries in the town of Marshall, not far from Detroit. It'll employ about 2,500 people. But all this comes at a time when relations between the U.S. and China are at rock bottom, and there are concerns the deal could give China leverage over the direction of American auto and energy policy. Hoyu Chong is a senior analyst at the Information Technology and Innovation Foundation, a Washington think tank. She says China is known for intellectual property infringements and theft.

HOYU CHONG: However, the difference is that the Chinese company is not stealing or reverse engineering American technology in China. But rather, this is Ford borrowing CATL's technology to manufacture batteries.

NORTHAM: The Michigan factory will be wholly owned by Ford, but Chinese engineers will be at the plant. Chong says it's not unusual in the technology world to collaborate with a competitor that has hands-on knowledge. In a statement, Ford says the deal with CATL will help the U.S., quote, "compete and win globally." Derek Scissors, a China specialist at the American Enterprise Institute, says Ford will have to decide how long that collaboration lasts.

DEREK SCISSORS: You know, I think it's worth asking Ford, you know, what's your plan to build up your own self-sufficiency? If you're just going to be dependent on CATL forever, that's not a good thing for the United States.

NORTHAM: There's been pushback against the automaker's plans. Virginia's Republican Governor Glenn Youngkin withdrew his state's bid for the factory, calling it a Trojan horse for the Communist Party of China. Last month some members of Congress demanded more information from Ford about the deal. And Derek Scissors questions whether Ford should be eligible for tax breaks under the Inflation Reduction Act, the $370 billion bill to mitigate climate change.

SCISSORS: I think once you decide you want to partner with a large Chinese firm, you can forget about that.

NORTHAM: But Kennedy with the CSIS says Ford likely considered all these issues, from security to tax breaks, when it entered into the deal with CATL. He says there will have to be some trade-offs if the U.S. wants to compete in the electric vehicle arena.

KENNEDY: On the one hand, we want to reduce our vulnerabilities and exposure to China. On the other hand, we want to get through the energy transition as fast as possible.

NORTHAM: And those two goals aren't always compatible. Jackie Northam, NPR News, Washington. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Jackie Northam is NPR's International Affairs Correspondent. She is a veteran journalist who has spent three decades reporting on conflict, geopolitics, and life across the globe - from the mountains of Afghanistan and the desert sands of Saudi Arabia, to the gritty prison camp at Guantanamo Bay and the pristine beauty of the Arctic.