According to sources cited by Reuters, Ford Motor Co. is expected to announce on Monday that it intends to invest $3.5 billion in a lithium iron phosphate battery plant in Michigan.

According to sources, Ford will likely own and run the plant with Contemporary Amperex Technology Co Ltd (CATL), a Chinese battery company, as a technology partner to help develop the batteries. Ford chose not to confirm the intentions.

It is anticipated that the plant will eventually employ at least 2,500 people and be situated close to Marshall, Michigan. A 1,900-acre Marshall “megasite,” located about 100 miles west of Detroit, has been promoted by the state.

In order to generate stable cash flow without taking on significant risks or making significant investments, CATL, which declined to comment, signed technology licensing agreements with Hyundai MOBIS in 2021 and Arun Plus in 2022.

The $430 billion Inflation Reduction Act (IRA) was passed by Congress in August to restructure EV tax credits and eventually eliminate credits if any EV battery components were produced or put together by a “foreign entity of concern” or if batteries contained critical minerals that were extracted, processed, or recycled by a foreign entity of concern.

The regulations were designed to gradually wean the United States off of China’s battery supply network. Ford’s full ownership of the facility may make it more likely that the batteries it produces will be eligible for tax breaks.

Glenn Youngkin, the governor of Virginia, has come under fire for pulling out of a competition to win the proposed Ford battery plant because of its affiliation with CATL.

While Ford is a well-known American company, a Youngkin spokesperson stated last month that “it became clear that this proposal would serve as a front for the Chinese Communist party.”

The Michigan Economic Development Corporation chose not to respond to questions.

Youngkin’s decision was “politically determined,” Michigan Governor Gretchen Whitmer told the Detroit News in January.

Gotion High Tech, a Chinese battery company, would establish a new $2.36 billion plant in Big Rapids, Michigan, according to Whitmer’s announcement in October. Up to 150,000 tons of cathode material and 50,000 tons of anode material may be produced annually at the facility.

Ford announced in July that it would localize 40 GWh of battery capacity beginning in 2026 in North America. Additionally, it declared a deal with CATL to look into their potential supply of battery packs for Mustang Mach-E models for North America beginning in 2023. Additionally, it stated that they would talk about cooperating for batteries in Ford vehicles all over the world.

(Adapted from EconomicTimes.com)