A partnership between Ford Motor and a major Chinese battery maker is facing scrutiny from Republican lawmakers who say it could make the U.S. automaker dependent on a company with links to forced labor in China’s Xinjiang region.
In a letter sent to Ford on Thursday, the chairmen of the House Select Committee on the Chinese Communist Party and the House Ways and Means Committee demanded more information about the partnership, including what they said was Ford’s plan to hire several hundred workers from China at a new battery plant in Michigan.
Ford announced in February that it plans to set up the $3.5 billion plant using technology from Contemporary Amperex Technology Ltd., known as CATL, the world’s largest manufacturer of batteries for electric vehicles. CATL produces approximately one-third of electric vehicle batteries worldwide and supplies General Motors, Volkswagen, BMW, Tesla and other major automakers.
Ford has defended the partnership, saying it will help diversify Ford’s supply chain and allow a battery that is less expensive and more durable than current alternatives to be made in the United States for the first time, rather than imported.
But lawmakers, who have previously criticized the partnership, cited evidence that CATL had not relinquished its ownership of a company it helped set up in Xinjiang, where the United Nations. identified systematic violations of human rights.
CATL publicly divested its stake in the company, Xinjiang Zhicun Lithium Industry Company, in March, after its deal with Ford was announced. But the shares were bought by an investment partnership in which CATL owned a partial share and a former CATL manager who holds leadership roles in other companies owned by the conglomerate, company records show.
The circumstances of the sale raise “serious questions about whether CATL is trying to obscure links to forced labor,” wrote Reps. Mike Gallagher of Wisconsin, the chairman of the special committee, and Jason Smith of Missouri, the chairman of the Ways and Means Committee.
The lawmakers, citing details of Ford’s licensing agreement, which are on file with the select committee, also criticized the automaker’s commitment to hire several hundred Chinese workers. Employees from China would install and maintain CATL’s equipment at the Michigan plant until about 2038, the lawmakers said. Ford said the plant will employ 2,500 American workers.
“Ford argued that the deal would create thousands of American jobs, further Ford’s ‘commitments to sustainability and human rights’ and lead to American battery technologies,” they wrote. “But newly discovered information raises serious questions about each claim.”
TR Reid, a Ford spokesman, said the company had reviewed the letter and would respond in good faith. He said that human rights were fundamental to how Ford did business, and that the automaker was thorough in evaluating such issues.
“A lot has been said and implied about this project that is wrong,” Mr Reid said. “At the end of the day, we think creating 2,500 good-paying jobs with a new multi-billion dollar investment in America for great technology that we’re going to implement in great electric vehicles is good all around.”
CATL’s collaboration with Ford could be a bellwether for the electric car industry in the United States. Critics labeled the deal a “Trojan Horse” for Chinese interests and demanded throw out the partnership. If it succeeds, they say, reliance on Chinese technology could become the norm for the American electric car industry.
Ultimately, China’s control over key technologies like batteries could leave the United States “in a much weaker position,” said Erik Gordon, a clinical assistant professor at the University of Michigan’s Ross School of Business.
“The profit margins go to the innovators who provide the advanced technology, not to the people with screwdrivers who put the advanced technology together,” he said.
But CATL and other Chinese companies have battery technology not readily available from suppliers in the US or Europe. The Michigan plant would be the first in the United States to produce so-called LFP batteries, which use lithium, iron and phosphate as their main active materials.
They are heavier than the lithium, nickel and manganese batteries currently used by Ford and other car manufacturers but less expensive to make and more durable, able to withstand many charges without degradation. They also don’t use nickel or cobalt, another battery material, which are often mined in environmentally damaging ways, and sometimes with child labor.
Without the most advanced or least expensive batteries, American automakers could fall behind Chinese rivals such as BYD, which are pushing into Europe and other markets outside of China. Americans may also have to pay more for electric cars and trucks, which would slow sales of vehicles that do not emit greenhouse gases.
A battery introduced by CATL last year delivers hundreds of miles of driving range after charging for just 10 minutes.
“The hard truth is that the Chinese made a huge gamble on electric vehicles and dropped more than a trillion Chinese dollars and subsidies on this industry, and it just so happens that the gamble hit all the aces,” said Scott Kennedy, a China expert at the Center for Strategic and International Studies.
“If you decide not to partner with a very large battery, then you’re essentially committing to delaying the American energy transition,” he added.
Ford plans to use batteries made with CATL technology in lower-priced versions of vehicles like the Mustang Mach-E and F-150 Lightning pickup. The least expensive version of Tesla’s Model 3 sedan comes with an LFP battery, which CATL widely supplies.
For decades, Western companies have had a monopoly on the world’s most advanced technologies, and have sought access to the Chinese market while protecting their intellectual property.
But China’s dominance in electric vehicle batteries, as well as in the production of solar panels and wind turbines, has reversed that dynamic. It has created a particularly difficult dilemma for the Biden administration and other Democrats, who want to reduce the country’s dependence on China but also argue that the United States must quickly transition to cleaner energy sources to try to mitigate climate change.
The exposure of the solar and electric car battery industry to Xinjiang further complicates the situation. The Biden administration condemned the Chinese government for this genocide and crimes against humanity in the region.
The United States last year banned imports of products made in whole or in part in Xinjiang, saying companies operating in the region were unable to ensure their facilities were free of forced labor.
In 2022, CATL and partner registered a lithium processing company in the region called Xinjiang Zhicun Lithium Industry Company, which has advanced plans to become the world’s largest producer of lithium carbonate, a key battery component.
Through a series of subsidiaries and shareholder relationships, that Xinjiang lithium company has financial ties to a Chinese power company, Tebian Electric Apparatus Stock Company, or TBEA, according to records reviewed by The New York Times using Sayari Graph, a mapping tool for corporate ownership. TBEA has participated widely in so-called poverty alleviation and labor transfer programs in Xinjiang that The United States considers a form of forced labor.
While the Chinese government argues that labor transfer and poverty alleviation programs are aimed at improving living standards in the region, human rights experts say they are also aimed at pacifying and indoctrinating the population, and that Uighurs and other minorities there cannot say no to these programs without fear of arrest or punishment.
CATL did not respond to a request for comment. In December, it told The Times it was a minority shareholder in the Xinjiang company and strictly prohibited any form of forced labor in its supply chain.
The Republican lawmakers also raised concerns about whether batteries made at Ford’s Michigan plant would qualify for tax credits the Biden administration offered to consumers who bought electric cars as part of the Inflation Reduction Act.
The law prohibits “foreign entities of concern” – such as companies in China, Russia, Iran or North Korea – from benefiting from government tax breaks. But because Ford is licensing CATL technology for the plant — rather than forming a joint venture, as has often been the case with automakers and battery suppliers — the batteries made in Michigan can still qualify for those incentives.
The Biden administration has not yet clarified exactly how the restriction on foreign entities will be applied. But Ford officials said they were in conversation with the administration about the Michigan plant, and were confident the partnership would qualify for all the benefits of the law.
“We believe that batteries built by American workers in an American factory run by the wholly owned subsidiary of an American company will and should qualify,” said Mr. Reid, the Ford spokesman.