Lawmakers are challenging Ford and Chinese battery partner for forced labor
A licensing agreement between Ford Motor and a major Chinese battery maker is under scrutiny from Republican lawmakers, who say it could make a US automaker dependent on a company linked to forced labor in China’s Xinjiang region.
In a letter sent to Ford on Thursday, the chairmen of the Chinese Communist Party’s House Select Committee and the House Ways and Means Committee demanded more information about the agreement, including what they said was a plan by Ford to employ several hundred workers from China at a new battery plant in Michigan.
Ford announced in February that it planned to build the $3.5 billion plant using technology from Contemporary Amperex Technology Ltd., known as CATL, the world’s largest manufacturer of batteries for electric vehicles. CATL produces approximately one-third of electric vehicle batteries worldwide and supplies General Motors, Volkswagen, BMW, Tesla and other major automakers.
Ford has defended the partnership, saying it will help diversify Ford’s supply chain and ensure that a battery that is cheaper and more sustainable than current alternatives is made in the United States for the first time, rather than imported.
But lawmakers, who previously criticized the agreement, cited evidence that CATL had not relinquished ownership of a company it helped set up in Xinjiang, where the United Nations has identified systematic human rights violations.
CATL publicly sold its stake in the company, Xinjiang Zhicun Lithium Industry Company, in March after the deal with Ford was announced. But the shares were bought by an investment company in which CATL had had a partial interest when it was founded, as well as one former CATL manager who holds executive positions in other companies owned by the battery manufacturer, company records show.
The circumstances of the sale raise “serious questions about whether CATL is trying to cover up forced labor ties,” wrote Representatives Mike Gallagher of Wisconsin, the select committee chair, and Jason Smith of Missouri, the Ways and Means Committee chair.
The lawmakers, citing details of Ford’s licensing agreement submitted to the select committee, also criticized the automaker’s commitment to employ hundreds of Chinese workers. Workers from China would set up and maintain CATL’s equipment at its Michigan plant until about 2038, lawmakers said. The plant is expected to employ 2,500 American workers, Ford said.
“Ford has argued that the deal will create thousands of U.S. jobs, strengthen Ford’s ‘commitments to sustainability and human rights’ and lead to advances in U.S. battery technology,” they wrote. “But newly discovered information raises serious questions about any claim.”
TR Reid, a Ford spokesman, said the company was reviewing the letter and would respond in good faith. He said human rights were fundamental to Ford’s way of doing business, and that the automaker thoroughly assessed such issues.
“An awful lot has been said and suggested about this project that is false,” said Mr. Reed. “Ultimately, we think creating 2,500 high-paying jobs with another multibillion-dollar investment in the U.S. for great technology that we’ll apply in great electric vehicles is totally right.”
CATL responded after publication, saying it has no equity relationship with the investment partnership that bought the Xinjiang company, but did not immediately provide any documentation.
CATL’s partnership with Ford could be a benchmark for the electric car industry in the United States. Critics have labeled the agreement as one “Trojan Horse” for Chinese interests and called for sinking the partnership. If successful, reliance on Chinese technology could become the norm for the US electric car industry.
Ultimately, China’s control of key technologies like batteries could put the United States “in a much weaker position,” said Erik Gordon, clinical assistant professor at the University of Michigan Ross School of Business.
“The profit margins go to the innovators who provide the advanced technology, not the people with screwdrivers who assemble the advanced technology,” he said.
But CATL and other Chinese companies don’t have battery technology readily available from suppliers in the United States or Europe. The Michigan plant would be the first in the United States to produce so-called LFP batteries that use lithium, iron and phosphate as the main active materials.
They are heavier than the lithium, nickel and manganese batteries currently used by Ford and other automakers, but are cheaper to make and more durable, able to withstand countless loads without deteriorating. They also do not use nickel or cobalt, another battery material, which is often extracted in environmentally harmful ways, and sometimes with child labour.
Without the most advanced or cheapest batteries, US automakers could fall behind Chinese rivals like BYD, who are encroaching on Europe and other markets outside of China. Americans may also have to pay more for electric cars and trucks, which would slow sales of vehicles that don’t emit greenhouse gases.
A battery unveiled by CATL last year delivers hundreds of miles of driving range after just 10 minutes of charging.
“The hard truth is that the Chinese took a huge gamble on electric vehicles, looting more than a trillion Chinese dollars and subsidies to this industry, and it just so happens that that gamble came out on all aces,” said Scott Kennedy, a China expert at the Center for Strategic and International Studies.
“If you decide not to partner with a very large battery manufacturer, you are effectively committing yourself to delaying the energy transition in the US,” he added.
Ford plans to use batteries made with CATL technology in lower-cost versions of vehicles such as the Mustang Mach-E and F-150 Lightning pickup. The cheapest version of Tesla’s Model 3 sedan comes with an LFP battery that CATL reportedly supplied.
For decades, Western companies have had a monopoly on the world’s most advanced technologies and have sought to enter the Chinese market while protecting their intellectual property.
But China’s dominance in electric vehicle batteries, as well as solar panel and wind turbine production, has reversed that dynamic. It has created a particularly tricky dilemma for the Biden administration and other Democrats, who want to reduce the country’s dependence on China but also argue that the United States must move quickly to cleaner energy sources to combat climate change.
The exposure of the solar and electric vehicle battery industry to Xinjiang further complicates the situation. The Biden administration has condemned the Chinese government for execution genocide and crimes against humanity in the region.
The United States last year banned imports of products made in whole or in part in Xinjiang because companies operating in the region cannot guarantee that their facilities are free of forced labor.
In 2022, CATL and a partner registered a lithium processing company in the region named Xinjiang Zhicun Lithium Industry Company, which promoted plans to become the world’s largest producer of lithium carbonate, an important component of the battery.
Through a series of subsidiaries and shareholder relationships, that Xinjiang lithium company has financial ties to a Chinese electric utility company, Tebian Electric Apparatus Stock Company, or TBEA, according to data reviewed by The New York Times through Sayari Graph, a corporate ownership mapping tool. TBEA has participated extensively in so-called poverty alleviation and labor transfer programs in Xinjiang consider the United States a form of forced labour.
While the Chinese government argues that labor transfer and poverty reduction programs aim to improve living standards in the region, human rights experts say they also aim to pacify and indoctrinate the population, and that Uighurs and other minority groups there cannot say no to these programs without fear of detention or punishment.
In December, CATL told The Times that it was a minority shareholder in the Xinjiang company and strictly banned any form of forced labor in its supply chain.
Republican lawmakers also raised concerns about whether batteries made at Ford’s Michigan plant would qualify for tax credits that the Biden administration offered to consumers who purchased electric vehicles as part of the Inflation Reduction Act.
The law prohibits “foreign entities of concern” — such as companies in China, Russia, Iran or North Korea — from taking advantage of government tax cuts. But because Ford licenses CATL technology to the plant — rather than creating a joint venture, as has often been the case with automakers and battery suppliers — batteries made in Michigan can still qualify for those incentives.
The Biden administration has not yet clarified exactly how the restriction will be applied to foreign entities. But Ford officials said they were in talks with the administration about the Michigan plant and were confident the facility would qualify for all legal benefits.
“We believe that batteries built by US workers in a US factory run by the wholly owned subsidiary of a US company will and should qualify,” said Mr. Reid, the Ford spokesman.