The joint battery plant of Chinese battery maker CATL and U.S. automaker Ford in the United States is not excluded from those eligible for subsidies under the local Inflation Reduction Act (IRA) of the U.S. government, a leading Chinese newspaper reported.
“Ford has not found anything in the IRA or its guidelines that excludes the technology license partnership with Chinese battery maker CATL from the subsidy list,” a Ford spokesperson said in a media interview on Jan. 5, according to Shanghai Securities News. The guidelines in the IRA released in December mean that the joint battery plant between Ford and CATL will not be scratched off the U.S. subsidy list.
Shanghai Securities News reported on the evening of Jan. 6 that a CATL official said that cooperation was proceeding normally between the two companies.
In February 2023 Ford said it will build a battery plant based on CATL’s lithium iron phosphate (LFP) battery technology in Michigan in the United States. Ford will invest US$3.5 billion and take a 100 percent stake in the project, while CATL will cooperate with Ford by providing its licensed technology.
CATL’s lack of a stake in the battery plant is seen as a strategy to take advantage of the U.S. IRA, which provides a tax credit of up to US$7,500 for electric vehicles that meet North American battery component and key mineral origin requirements and are finally assembled in North America.
The IRA restricts procurement from so-called foreign entities of concern (FEOCs) for battery components and key minerals, starting from this year for battery components and starting from 2025 for key minerals such as lithium, nickel, cobalt and graphite. According to detailed regulations for IRA subsidies released in December, all Chinese companies and joint ventures with at least 25 percent Chinese ownership are designated as FEOCs, so there has been a lot of interest in China recently about whether or not CATL’s and Ford’s joint battery plant will qualify for subsidies.
Ford’s and CATL’s plan to build a joint battery plant in the United States in February last year drew scrutiny not only from the Chinese government but from the U.S. House of Representatives’ Committee on Committee on Ways and Means and the Select Committee on the Strategic Competition between the United States and the Chinese Communist Party.