Two Years In The Making — How The Ford/CATL Deal Got Done
Autoblog
In addition, the trade war between the US and China that began under the prior administration continued to sputter along, fueled by reports of slave labor conditions in some parts of China with large populations of Uyghur dissidents. Then just a few weeks ago, a Chinese spy balloon made a long and widely condemned journey across America, further exacerbating tensions between the two countries.The Inflation Reduction Act has stirred the pot even further.
“The deal has already set a precedent,” Tu Le, managing director of China and US-based advisory firm Sino Auto Insights, said in an interview withThe Long Path To Michigan The automaker got offers from multiple US states anxious to land a factory that promised to provide thousands of high wage jobs. The eager bidders included Virginia, which pushed a site in a rural area in the south-central part of the state, according to people familiar with the proposal.
That’s when Ford and CATL came up with a plan to maximize the tax benefits of the IRA that would avoid political opposition. Ford will own and operate the plant as a wholly owned subsidiary, while licensing the technology from CATL, which will help with installation of factory equipment at the plant and have permanent staff on site.
For CATL, the Michigan pact allows the company to establish itself in the US without bearing the multi-billion dollar expense of building and operating a factory. It also adds yet another major brand to its growing stable of clients. Tesla, which amounted to 10% of its company’s sales in 2021, is by far its largest single customer.
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