CATL, EVs, And All That Jazz -- October 2, 2023

 Locator: 45622EVS.

Update -- Much More To The Story

Link to Forbes.

The chairs of the three most powerful House committees have threatened to subpoena Ford if it does not provide documents detailing a deal with China’s CATL battery maker. Ford cannot ignore this request, and it might even force them to back out of the deal. It’s already pressed pause on a new $3.5 billion battery plant in Michigan.

It’s not clear what Ford will do after this, but the experience illustrates how turbulent the electric vehicle (EV) transition might be.

In 2021, President Biden announced an executive order that directs government policies to ensure 50% of all new passenger vehicle sales are electric by 2030. This year, the administration proposed that the figure increase to two-thirds by 2032. These are ambitious targets—the electric vehicle (EV) share of the new vehicle market was just 7% for the first half of this year. Getting from 7% to 67% by 2032 in a commercially viable way is going to take a massive reallocation of people, capital, and resources.

Such a monumental transition would be challenging even in the best of times. Today’s EVs are powered by lithium-ion batteries. Coupling and growing the two industries together comes with many challenges, including investing in new capital equipment, forming new business ventures, licensing the know-how, and ensuring they have the right people in place.

Mining and processing the raw materials for these batteries so far has largely been done outside of the United States. Ford found a way to domestically manufacture EVs by licensing battery cell technology from China’s CATL, a world leader in lithium iron phosphate battery technology. The arrangement was announced in February 2023 and allowed for Ford’s wholly owned subsidiary in Michigan to manufacture the battery cells using CATL’s LFP battery cell knowledge and services. In other words, Ford will control a 100% ownership stake in the plant while licensing the know-how.

Now, congressional concerns over CATL’s ties to the Chinese Communist Party have led to the subpoena, and Ford has halted work at the Michigan battery factory. It’s unclear if they will resume.

Original Post -- Some Weeks Ago

Ford halts construction of $3.5 billion EV battery plant in Michigan:

• why Barron's says this is a big, big deal; link here; link here, also;
• "Michigan" can't be happy
• how many union jobs lost or "put on hold"?
• Ford re-thinking this EV thing?
• UAW - Ford, GM, Stellantis -- circular firing squad
• UAW planned / plans for months (plural)-long strike and will gradually expand