February 15, 2023: -On Monday, Ford Motor said that it would unite with a Chinese supplier on a recent $3.5 billion battery manufacturer for E.V. in Michigan, despite tensions amid the U.S. and China.

The expected information of the deal amid Ford and Contemporary Amperex Technology Co., or CATL, after Virginia Gov. Glenn Youngkin who says that he was withdrawing the place from a competitive process attracting the planned Ford plant regarding its connection to the Chinese firm.

Ford’s vice president of E.V. industrialization, Lisa Drake, said the automaker would own the recent facility through an owned subsidiary instead of working it as a joint business with CATL, which the automakers, which include Ford, have done with non-China partners in the U.S. She stated that the company would license the technology from CATL, which will be a partner.

“The LFP technology is present in the U.S. It’s in a lot of consumer electronics gadgets; it’s actually in one more OEM product, but, unfortunately, it’s a lot of imported,” Drake stated during a media call. “This project is focused at de-risking that by building out the capacity and the will to scale this technology in the U.S., where Ford has control,” he further stated.

According to the Detroit automaker, the plant is expected to open in 2026 and employ approximately 2,500 people. It will produce recent lithium iron phosphate batteries, or LFP, instead of pricier nickel cobalt manganese batteries, which the company is currently using. The recent storms are expected to offer a lot of benefits at a lower cost, which will assist Ford in increasing E.V. production and profit margins.

Ford is after E.V. leader Tesla using LFP batteries in a number of its vehicles to decrease the amount of cobalt they only needed to procure to create battery cells and high-voltage battery boxes.

Drake stated that Ford is not concerned regarding the Chinese administration interfering with the deal, saying the firms “certainly thought about that, and those are provisions,” which include optionality in the contract.

Ford’s ownership, instead of a joint venture, may assist it in avoiding additional political objections and potentially qualify for federal E.V. tax credits.

Marin Gjaja, chief customer officer of Ford’s E.V. unit, said once production at the Michigan plant starts, the vehicles are expected to qualify for half of the increased to $7,500 federal tax incentives for consumers buying an E.V. He said they’re expected to meet local production needs but not material sourcing rules for the batteries.

Regarding the $3.5 billion asset, Ford and its battery partners have announced $17.6 billion in assets in electric vehicle and battery production since 2019 in the U.S.