Ford could honor the federal made-in-America EV subsidy requirement and still use Chinese batteries | Daily News Byte

Ford could honor the federal made-in-America EV subsidy requirement and still use Chinese batteries

 | Daily News Byte


While the US Treasury is still to release its promised clear guidelines for automakers on how to qualify for the upcoming federal EV subsidy scheme, Ford may be working on a way to qualify its electric cars from the start despite using Chinese battery technology. It is reportedly exploring a fraudulent battery factory ownership scheme where the plant is owned by Ford, while Contemporary Amperex Technology Limited (CATL) provides its management and the technology of battery.

Ford’s Korean battery partners have reportedly rejected a similar scheme they worry could lead to an inevitable technology transfer, but CATL may be more willing to entertain the thought given geopolitical tensions in US.

CATL is the world’s largest EV battery manufacturer and Ford wanted access to its superior LFP cell packs while simultaneously meeting the Inflation Reduction Act’s EV subsidy requirements as follows:

  • To qualify for the first $3,750 credit, a percentage of the value of the applicable critical minerals contained in vehicle batteries must be obtained or processed in the US or in a country with which the US has a free trade agreement or must is recycled in North America. The applicable percentages increase from 40 percent before 2024, to 80 percent after 2026. Qualifying critical minerals include aluminum, cobalt, lithium, nickel, and graphite, among others.
  • To qualify for the second $3,750 credit, a certain percentage of the cost of the battery components in an EV must be manufactured or assembled in North America; applicable percentages increase from 50 percent before 2024 to 100 percent after 2028.
  • Additionally, after calendar year 2024, a clean vehicle will not qualify for the tax credit if it contains any critical minerals that are “extracted, processed, or recycled by a foreign entity of concern ” – including companies owned, controlled by or subject to the jurisdiction of the government of the People’s Republic of China.
  • After December 31, 2023, a vehicle may not qualify for the credit if any “parts” contained in its battery are “manufactured or assembled by a foreign entity of concern.”

That last bit sent automakers wanting to sell subsidized EVs in the US scrambling to sign partnerships with Korean battery makers that wouldn’t be a going concern. This includes Ford which recently made a country tour to check on SK On and LG for the reason of US factory expansion.

While CATL will still make phosphate batteries for Ford, it doesn’t have any investment in its factory or infrastructure, so in theory Ford vehicles with those cells should qualify for the US$7,500 subsidy towards the purchase of a new EV starting. next year.

There are many models being discussed about our investment in the US, and all those options are based on and only based on business concerns.,” commented CATL, which was also looking to build a plant in Mexico before subsidies made US manufacturing a viable alternative as well.

Ford recently said it has signed contracts for 70% of the battery capacity it will need to secure production of its promised 2 million electric vehicles annually by 2026. Because CATL’s LFP cells are likely which is a large part of those contracts, it has every incentive to both meet the US government’s EV subsidy requirements and continue to use CATL batteries. “Our talks with CATL are ongoing – and we have nothing new to announce,” Ford clarified when asked for comment.

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