Ford Will Build a U.S. Battery Factory With Technology From China

Ford Motor said on Monday that it planned to build a $3.5 billion electric-vehicle battery factory in Michigan using technology licensed from a Chinese company that has become one of the most important players in the auto industry.

The plant, to be built in Marshall, a rural town about 100 miles west of Detroit, will be the latest in a growing list of new battery and electric-car factories that companies have announced in recent months. Ford expects to employ about 2,500 people at the plant and begin production in 2026.

The automaker said it would own 100 percent of the plant and make battery cells using technology and services from Contemporary Amperex Technology Limited, known as CATL. The company, the world’s largest producer of batteries for electric vehicles, has 13 factories of its own in Europe and Asia but none in the United States.

Just a quarter-century ago, Chinese officials were eagerly asking U.S. automakers to bring their investments and expertise to China. Today, the roles are reversed, with one of America’s most storied industrial giants asking China for the technology needed to survive in a rapidly changing global automotive landscape.

“This will help us build more E.V.s faster,” William Clay Ford Jr., the company’s executive chairman, said on Monday. He added that CATL would “help us get up to speed so we can build the batteries ourselves.”

The alliance comes at a time of considerable tension between Washington and Beijing, after the United States shot down a Chinese surveillance balloon off the coast of South Carolina on Feb. 4. Secretary of State Antony J. Blinken abruptly canceled a trip to Beijing after the spy balloon was sighted above Montana.

Two more unidentified objects were shot down late last week, one over northernmost Alaska and another over northern Canada. A fourth unidentified object was shot down on Sunday over Lake Huron, off the eastern shore of Michigan.

China on Monday accused the United States of having sent high-altitude balloons through its airspace without permission more than 10 times since the start of last year.

The balloon dispute appears to have interrupted efforts by China to attract more foreign investment after it ended nearly three years of “zero Covid” policies and began to reopen its borders. Many politicians in the United States remain wary of China and of Chinese investment.

Gov. Glenn Youngkin of Virginia, a Republican, last month withdrew his state’s bid for Ford’s venture with CATL. He described the planned project to Bloomberg Television on Jan. 20 as a “Trojan horse” for the Communist Party of China.

Ford is seeking to insulate itself from U.S.-China tensions by opting to own the factory entirely and only licensing technology from CATL, which supplies batteries to Tesla, BMW and other large automakers.

The company said its contract with CATL includes provisions to work through difficulties that arise between the two countries. “Of course we’ve thought about it,” Lisa Drake, Ford’s vice president of E.V. industrialization, said in a conference call with reporters, without disclosing further details.

Ford, General Motors and other automakers are building other battery plants that are jointly owned with South Korean partners. Ford is building two battery plants in Kentucky and a third in Tennessee, both with SK On. G.M. recently started production at a battery plant in Ohio that it jointly owns with LG Energy Solution, and the partners are building two more plants, in Tennessee and Michigan.

Ford’s new plant will produce batteries that include lithium, iron and phosphate, a combination known as LFP. These batteries are less expensive because they do not include expensive ingredients like cobalt and nickel used in other batteries. LFP batteries also have the advantage of being more durable. But batteries that contain cobalt and nickel hold more energy, allowing electric vehicles to go farther before needing to be charged.

“The whole point of this project is to lower the cost of E.V.s,” Ford’s chief executive, Jim Farley, said. “LFP is the most affordable battery technology.”

Ford had looked at building the factory in Canada and Mexico but chose a U.S. site after the Inflation Reduction Act was signed into law last year by President Biden. The act provided tax incentives to companies that build battery factories in the United States. Car buyers are also eligible for tax credits for electric vehicles made in North America that include batteries and raw materials from the region or another U.S. trade ally.

“This is the reason the I.R.A. was passed,” Mr. Farley said, referring to the Marshall plant.

Ford’s decision is also a big victory for Michigan. Over the past two years, automakers have chosen Southern states for more than a half-dozen auto plants.

Ford said its plant would be able to produce enough batteries for 400,000 electric vehicles a year. The company plans to use the LFP batteries in its Mustang Mach-E, a sport-utility vehicle, and the F-150 Lightning, a pickup truck, and other electric vehicles. CATL will supply Ford with LFP cells until the Marshall plant begins production.

All automakers are trying to produce more electric vehicles, sales of which jumped 66 percent last year in the United States. Ford is the second-largest seller of EVs in the U.S. after Tesla.

Ford said vehicles with LFP batteries were better suited for commuting and local driving and could be charged up to 100 percent capacity quickly. Batteries with cobalt and nickel are better for long-range driving or towing, but generally take longer to charge.

CATL has 100,000 employees around the world, mostly in China, and has been the world’s largest supplier of electric car batteries for the past six years. A third of the electric cars now on the road around the world use CATL batteries.

The company is little known outside the auto industry. Robin Zeng, the founder and chief executive of CATL, set up the company in 2011 in his hometown, a previously impoverished area of fishing villages and rice paddies on the northern outskirts of Ningde, a town about halfway between Shanghai and Hong Kong.

CATL has hired thousands of engineers at low cost in a country that heavily emphasizes math and science education. The battery industry’s transformation of Ningde has echoed the boom that Detroit and Midwest experienced during the U.S. car industry’s heyday.

CATL has a third of its work force in Ningde, including many of its blue-collar workers. Rows of high-rise apartments have been built, holding down real estate prices to a tenth of those in cities like Beijing or Shanghai.

China almost completely closed its borders for nearly three years during the pandemic, preventing practically all foreigners from entering the country and limiting the ability of Chinese nationals to leave. CATL nonetheless negotiated global deals during this time, and began producing lithium-ion battery cells in December at a factory in Germany.

CATL also recently opened an office in Detroit to promote its batteries. A huge map of CATL’s worldwide operations on the wall of a lobby museum at its headquarters has a recently added dot for the Detroit office — except that the dot had been mistakenly placed in what appeared to be southwestern Wisconsin.

The process of making a lithium iron phosphate battery like the ones that Ford will be using could be seen on Sunday during a rare visit inside a cavernous CATL factory in Ningde.

The process starts with rolls of metal foil a tenth of the thickness of human hair. Aluminum foil is coated with an extremely thin layer of lithium, iron and phosphate, while copper foil is coated with an extremely thin layer of graphite. Large spools of the two kinds of foil, along with a third spool of very thin separators, are used to wind alternating layers together to make the core of each battery cell. The core is then clamped tightly together in a gray machine the size of a city bus.

A bright orange, 10-foot-tall robot, like the ones used in car assembly plant welding lines, picks up rows of battery cores and puts them into a cold press for compression. The cores then go through a kiln that heats them to 105 degrees Celsius (221 degrees Fahrenheit) to steam away any trace of water. The 300-yard-long hall in which the batteries are made is already kept much drier than even the Sahara.

After baking, liquid electrolyte — lithium salts with a solvent — is injected twice into each battery as an electrolyte. The batteries are then tightly sealed for delivery to customers.