Washington — The chair of the powerful House Ways and Means Committee wrote a letter Monday to Ford Motor Co. arguing the company’s planned battery plan in Marshall, Michigan, may go against the intent of the Inflation Reduction Act.
Ford is building a $3.5 billion battery plant in the small town east of Battle Creek to power its new electric vehicles. It is licensing technology for the project from Contemporary Amperex Technology Co. Ltd., or CATL, which is based in China and is the world’s leading EV battery maker.
That arrangement has come under fire from Republicans in Congress, who have argued the project may pose a national security risk and would unjustly benefit from taxpayer subsidies through the IRA. Ford, whose global headquarters are in Dearborn, has said the company will wholly own and control the battery facility.
“I am alarmed about how Ford has structured this project in the context of the IRA’s clean vehicle credits and am concerned that other automakers may seek to use loopholes in the IRA to avoid guardrails meant to protect American enterprise and workers,” Rep. Jason Smith, R-Missouri, wrote in a letter to Ford CEO Jim Farley.
The letter also included a series of questions about Ford’s relationship with CATL and its intention to claim tax credits related to electric vehicle production or sales.
The $7,500 consumer discounts on electric vehicles included in the IRA bar any company that uses battery components made or assembled by a “foreign entity of concern” from benefitting — one of multiple provisions aimed at pushing automakers away from supply chains that are heavily dominated by China.
The U.S. Treasury has not yet released rules indicating how this part of the law will be applied, but Smith questioned whether batteries produced at the planned Marshall plant would qualify.
He sent similar letters to 10 other automakers, including Audi AG, BMW AG, General Motors Co., Hyundai Motor Co., Nissan Motor Co., Rivian Automotive Inc., Stellantis NV, Tesla Inc., Volkswagen AG and Volvo Cars Ltd.
Ford did not immediately comment on Smith’s request, but has pushed back on Republicans’ characterizations of the Marshall project as a workaround to the IRA’s requirements.
T.R. Reid, director of corporate and public policy for Ford, told The Detroit News in February that the company is paying CATL for the right to use the latter company’s proprietary technology and its counsel in applying that technology. He also noted that companies such as Tesla Inc. and Honda Motor Corp. import batteries directly from CATL, which Ford has also done.
“We think the better solution for customers, for the country, including for workers and their families, and for Ford is to build them here,” he said.
CATL’s lithium iron phosphate battery is the best of its type out there, he added, “and we want to use it as we continue to lead the EV transition. And the agreement is for us to be able to do that through the plant that we’re building, will own, with our employees and — this is not unimportant — our additional layer of Ford innovation.”
State officials in Michigan, which has approved up to $210 million in state grants and $772 million in property tax exemptions for the project, have similarly defended the project.
“The real national security risk is not having domestic supply chains — the impacts of which we saw firsthand during the pandemic, when production lines screeched to a halt and auto prices went through the roof because these products were solely manufactured overseas,” Kathleen Achtenberg, a spokeswoman for the Michigan Economic Development Corporation, said in February.
“To insulate our economy, we must reverse decades of jobs and technology going overseas — and we are leading that effort right here in Michigan.”
rbeggin@detroitnews.com
Twitter: @rbeggin