Ford deal shows U.S. EVs can’t unplug from China

CALB

15/02/2023 02:58

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are their own.)
       HONG KONG, Feb 15 (Reuters Breakingviews) - The carmaker
says a new $3.5 billion battery plant will create some 2,500
jobs and bring more manufacturing back to Michigan, the
traditional heart of the U.S. automobile industry. It’s evident
that President Joe Biden’s Inflation Reduction Act “did what it
was intended to do”, according to one executive. Not exactly:
the factory runs on Chinese know-how. 
    Ford Motor  F.N  is licensing technology and services from
China’s Contemporary Amperex Technology  300750.SZ , rather than
buying batteries directly or forming a joint venture. This
unusual setup allows the American auto veteran to use CATL’s
lithium ferro-phosphate (LFP) chemistry whilst satisfying the
IRA’s demands. It also, however, highlights an awkward fact:
many Chinese companies, including the world’s largest battery
maker, are miles ahead of their U.S. peers. 
    LFP, which is cheaper and safer than competing chemistries,
accounted for nearly 40% of the global market by the end of
2022, Bernstein estimates. But although it was invented in North
America, Chinese suppliers dominate the supply chain: LFP makes
up more than half of production at CATL, BYD  002594.SZ 
 1211.HK , CALB  3931.HK , EVE Energy  300014.SZ  and Gotion
High Tech  002074.SZ , according to UBS. As automakers start
mass-producing electric vehicles, they will depend on Chinese
suppliers, wherever they locate their factories. (By Katrina
Hamlin)
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 (Editing by Pete Sweeney and Thomas Shum)
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