[韓배터리, IRA수혜 흔들]
Ford, CATL to build battery plant in US
Adopting a technology partnership method… American company outside
Receive subsidy without violating ‘China Exclusion’
Concerns about battery damage following electric vehicles in Korea
Ford, the second-largest automobile in the U.S., is building a battery factory by investing 3.5 billion dollars (approximately 4.5 trillion won) in partnership with CATL, the world’s No. The intention is to bypass the US Inflation Reduction Act (IRA) regulations in the form of a technical partnership, not a joint venture, and produce electric vehicles with cheap Chinese batteries while collecting government subsidies. At least, the IRA’s principle of excluding Chinese batteries, which was favorable to Korean companies, has become virtually useless.
Ford held a press conference on the 13th (local time) and said, “We will build a plant to produce lithium iron phosphate (LFP) batteries based on CATL technology in Marshall, Michigan, operate it from 2026, and create 2,500 jobs.” The cooperation between the two companies, which had been discussed in the media, was made official on this day. The production capacity of the new plant is 35GWh (gigawatt hour) and is equivalent to 400,000 electric vehicles. Since this battery plant is a technology licensing method, Ford will have a 100% stake.
This is not the way American automakers such as Ford and General Motors (GM) have chosen to establish joint ventures with Korea’s SK On and LG Energy Solutions. Ford seems to have taken the form of an American company to bring CATL technology, avoid the political blitz that it brought in Chinese capital, and try to circumvent IRA regulations. From 2024, the IRA will not subsidize electric vehicles equipped with batteries manufactured in ‘concern countries’ such as China.
The reason why Ford joined hands with China is because of cost reduction. “The key to the LFP battery production project is to lower the cost of electric vehicles,” said Ford CEO Jim Farley. LFP is the cheapest battery technology.”
Nickel-cobalt-manganese (NCM) batteries, the flagship of Korean companies, have a much longer mileage on a single charge, but are up to 30% more expensive to manufacture than LFPs. For this reason, Tesla Model 3 and Mercedes-Benz are also using Chinese LFP batteries for their low-cost models. Ford’s strategy is to allow consumers to choose NCM and LFP batteries directly, just as they select car options.
As a result, fierce competition was inevitable for Korean companies that were trying to challenge China to become the world’s No. 1 in the battery market with IRAs. CATL has solidified its No. 1 position in the world with a global battery share of 37% last year. An official from the domestic battery industry said, “The expectation that the automobile industry would be harmed by the IRA while the battery sector would benefit relatively has collapsed.”
K battery hit in the back by ‘IRA bypass’
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Entering the US home market by digging through the IRA loophole
Domestic-focused Chinese batteries broaden their global stride
LG-SK-Samsung, etc. market share emergency
“Ford became the first company in the United States to have both battery-type manufacturing bases.”
At a press conference held on the 13th (local time), U.S. Ford Motor Company CEO Jim Farley announced plans to cooperate with CATL to produce local lithium iron phosphate (LFP) batteries. AP NewsisJim Farley, CEO of Ford Motor Company of the United States, said this at a press conference on the 13th (local time) at ‘Ion Park’, a battery development center in Romulus, Michigan. It is a declaration that he has secured CATL’s lithium iron phosphate (LFP) battery following the nickel cobalt manganese (NCM) battery jointly produced with SK On. Production at the Michigan plant will begin in 2026.
The news that CATL, China’s largest battery maker, is entering the ‘home’ of the United States has made the domestic battery industry unable to hide its agitation. This is because the US government’s plan to announce the Inflation Reduction Act (IRA) has virtually eliminated China’s containment, and it is expected that Chinese companies’ low-cost LFP battery offensive will begin in earnest in the North American market.
Ford decided to build a 100% Ford-owned ‘American battery factory’ instead of paying a license fee for CATL’s mineral mixing technology. Even batteries based on Chinese technology can avoid IRA regulations if they are produced by American companies in the United States. Ford Chief Customer Officer (CCO) Marin Zaza emphasized, “When production begins at the Michigan plant, half of the subsidy of up to $7,500 can be secured by meeting the ‘country of origin qualification’.”
From CATL’s point of view, it is meaningful in that it will establish the first production base in the United States, even though it does not lead to immediate profits. CATL, which has manufacturing plants in Europe and Asia, has been pushing for the establishment of local plants targeting the North American market, but has been struggling due to the conflict between the US and China. Samsung Securities said on the 13th, “The reason why CATL agreed to the Ford plan even though it is difficult to expect financial results is because the IRA has a 10-year period.” We can expect results.”
The IRA provisions, which were in the direction of excluding key minerals for batteries mined in China, are also showing some relaxation. In December of last year, the US government IRA white paper included content that allows subsidy payments to be made even if the region that created more than 50% of added value, such as mineral processing, is the United States and a country that has signed a free trade agreement (FTA) with the United States. If China imports lithium and manufactures key parts such as cathode materials at a plant in Michigan, it is possible to avoid IRA regulations.
The domestic battery industry has expected that the position of Chinese competitors, including CATL, will narrow due to the IRA, which stipulates that no subsidy for electric vehicles will be given to cars equipped with Chinese batteries or sourced from Chinese minerals. Since the announcement of the IRA, he has been seeking a way out by securing raw materials outside of China, but was caught off guard by this announcement.
The reason why Ford joined forces with China despite criticism of a kind of ‘trick’ is to respond to the price cut war in the electric vehicle industry led by Tesla. If Chinese companies continue to take such detours with cheap LFP batteries, concerns are raised that the North American market position of domestic companies that do not yet have LFP batteries will be reduced. LFP batteries have a low risk of fire and are 30% cheaper than NCM batteries, which are the mainstay of the domestic industry, but have the disadvantage of lower output and mileage. However, it is known that the level of output of LFP batteries has also increased considerably due to the recent technological expansion of Chinese companies. LG Energy Solutions, SK On, and Samsung SDI are also researching and developing LFP batteries, but they have yet to decide on mass production.
The global stride of the Chinese battery industry, which was focused on the domestic market, is gradually expanding. According to market researcher SNE Research, the use of CATL products (battery usage) in the global market excluding China increased by 131% last year, growing rapidly.
An official from the battery industry said, “Movement to adopt LFP batteries for entry-level models by finished car makers is expanding. From the point of view of finished vehicles, the attractiveness of the Chinese battery industry will gradually increase.”
New York =
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.