Ford has announced the suspension of work on its $3.5 billion electric vehicle battery factory in Michigan, according to The Detroit News (Sept. 25). However, its partner in the project, CATL, the Chinese battery giant, has stated that the collaboration is still ongoing.
Ford has stated that there are “a number of considerations” behind the decision to suspend work on the plant. The company has not provided specific details but has mentioned that the suspension will continue until the plant can be operated competitively.
Ford had originally planned to manufacture EV batteries with technology licensed from CATL, raising concerns about increasing US reliance on China in a critical industry.
CATL’s Shares Slump
The partnership with Ford was seen as a strategic and potentially lucrative move for CATL. Under the deal signed in February, CATL would earn licensing and service fees by sharing its technical know-how with Ford.
However, news of Ford’s halt in work on the plant caused a nearly 2.5% drop in CATL’s shares on the Shenzhen index, while the overall index declined by about 0.5%.
CATL maintains that its partnership with Ford is progressing smoothly, dismissing news of the suspension as “fake information.”
The suspension of the Ford battery factory is being described as a “black swan” event by Chinese state-run outlet Securities Daily, highlighting the potential significant consequences of this unpredictable development.
Challenges Faced by Ford’s EV Battery Plant
The work stoppage at the Michigan battery plant coincides with the ongoing strike by the United Auto Workers (UAW) union against the big three US carmakers, including Ford. The strike, which began on Sept. 15, has expanded to additional General Motors and Stellantis facilities, with over 18,000 auto workers demanding pay raises.
Furthermore, Ford has acknowledged that there are significant gaps remaining in its contract talks with UAW. The union has criticized the suspension of the EV battery plant as a threat to jobs.
Meanwhile, the US House Select Committee on the Chinese Communist Party, which focuses on national security threats posed by Beijing, launched an investigation in July into the Ford-CATL partnership. The committee has celebrated the plant’s suspension and called for the deal to be completely canceled.
Quartz has reached out to both Ford and CATL for comment.
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