Virginia Governor Glenn Youngkin has rejected Ford Motor Co’s (NYSE: F) investment to build a battery plant that would support its electric vehicle production targets, citing the latter’s involvement with Chinese battery manufacturer Contemporary Amperex Technology Co. Ltd. (CATL).
“While Ford is an iconic American company, it became clear that this proposal would serve as a front for the Chinese Communist party, which could compromise our economic security and Virginians’ personal privacy,” Youngkin spokesperson Macaulay Porter told The Detroit News.
The proposal was rejected by Youngkin back in December, with Porter saying that it never reached the final stage and was trashed “when the potentially damaging effects of the deal were realized,” pertaining to CATL’s involvement.
“Virginians can be confident that companies with known ties to the Chinese Communist Party won’t receive a leg up from the Commonwealth’s economic incentive packages,” she added.
CATL, the world’s largest battery maker, already supplies batteries to American EV-maker Tesla (Nasdaq: TSLA) and Ford but has not, until recently, secured a joint venture with an American carmaker to build a factory in the US unlike competitors LG Chem, Panasonic, SK On, Samsung SDI, because of simmering tensions between China and the US.
The partnership with Ford was first reported by Bloomberg early in December, saying that the two industry giants were drawing up a unique structure where the American carmaker would own the facility and infrastructure, and the Chinese battery manufacturer would operate the factory and own the technology used to build the battery cells.
“Such an arrangement would let the facility qualify for lucrative production tax credits under the new Inflation Reduction Act while requiring no direct financial investment from CATL,” according to the Bloomberg report.
CATL has figured into Ford’s EV plans prior to planning the facility. In July, when Ford was outlining its plans to secure EV raw materials and batteries, the two companies signed an agreement that includes CATL supplying lithium iron phosphate (LFP) batteries for Mustang Mach-Es in North America beginning this year and the F-150 Lightning starting early next year.
Ford CEO Jim Farley set an EV production capacity target of 600,000 units by the end of 2023, and at least 2 million units by the end of 2026. Localizing LFP production at the facility with CATL is just one of its major investments toward fulfilling its targets. It has also secured a joint venture with South Korean battery manufacturer SK On for two facilities in Kentucky and another in Tenessee.
When the venture with CATL was first reported, it was said that Ford was eyeing to build it either in Virginia and or Ford’s home state of Michigan.
As of this writing, Ford has yet to confirm the final location of the facility. The Detroit News reports that locations in Marshall, Grand Ledge near Lansing, and Mundy Township in Genesee County are “considered sufficiently large” enough to accommodate the facilities.
The EV facility is projected to generate at least 2,500 jobs.
Youngkin’s concerns over China’s involvement is a growing trend across the US as tensions between the two superpowers continue to rise, following former Speaker of the House Nancy Pelosi’s visit to Taiwan.
Information for this briefing was found via The Detroit News, the Associated Press, Bloomberg, and the sources and companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.