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Lawmakers Raise Concerns About Ford and Chinese Battery Partner’s Use of Forced Labor

Republican lawmakers are questioning a licensing agreement between Ford Motor and a major Chinese battery maker due to concerns that it could make the American automaker dependent on a company linked to forced labor in China’s Xinjiang region. The chairs of the House Select Committee on the Chinese Communist Party and the House Ways and Means Committee have written a letter to Ford, demanding more information about the agreement and expressing worry over Ford’s plan to employ several hundred workers from China at a new battery factory in Michigan.

In February, Ford announced its plans to establish a $3.5 billion factory using technology from Contemporary Amperex Technology Ltd. (CATL), the world’s largest maker of batteries for electric vehicles. CATL supplies batteries to major automakers like General Motors, Volkswagen, BMW, Tesla, and others. Ford defends the collaboration, stating that it will help diversify its supply chain and enable the production of a less expensive and more durable battery in the United States.

Lawmakers have cited evidence that CATL still has ties to a company it helped establish in Xinjiang, where human rights violations have been identified by the United Nations. Although CATL publicly divested its share of the company after the deal with Ford was announced, the shares were bought by an investment partnership that includes a former CATL manager who holds leadership roles in other companies owned by CATL. This raises concerns about CATL’s potential involvement in forced labor. Additionally, lawmakers criticize Ford’s commitment to employing Chinese workers at the Michigan factory, raising doubts about the creation of American jobs and the company’s dedication to sustainability and human rights.

Ford spokesperson T.R. Reid stated that the company is reviewing the letter and will respond accordingly, emphasizing that human rights are fundamental to Ford’s business practices. CATL responded by denying any equity relationship with the investment partnership that purchased the Xinjiang company but did not provide documentation to support the claim.

Critics have characterized CATL’s collaboration with Ford as a “Trojan horse” for Chinese interests and have called for the partnership to be terminated. They argue that if the agreement is allowed to proceed, it could establish a norm of relying on Chinese technology within the U.S. electric vehicle industry.

The Biden administration faces a challenging situation as it aims to decrease reliance on China while advocating for a swift transition to cleaner energy sources. China’s dominance in electric vehicle batteries poses a dilemma for the United States, as it could leave the country in a weaker position. However, Chinese companies like CATL possess battery technology that is not easily accessible from U.S. or European suppliers.

The Michigan battery plant would produce lithium iron phosphate (LFP) batteries, which are heavier but cheaper and more durable than current battery alternatives. These batteries do not use materials like nickel or cobalt, which are often environmentally damaging and sometimes involve child labor in their production. The production of advanced and affordable batteries is crucial for U.S. carmakers to compete with Chinese rivals and meet the demand for electric vehicles.

China’s massive investment in the electric vehicle industry has positioned the country as a leading innovator. U.S. automakers partnering with Chinese battery makers like CATL could be seen as a necessary step to accelerate the country’s energy transition. However, concerns remain regarding forced labor practices associated with Chinese companies, especially in Xinjiang.

The exposure of the solar and electric vehicle battery industry to Xinjiang adds complexity to the situation. The Chinese government has been criticized for carrying out genocide and crimes against humanity in the region. The United States has banned imports of products made in whole or in part in Xinjiang due to concerns about forced labor. CATL and its partner established a lithium processing company in Xinjiang, which has financial ties to a Chinese electricity company, TBEA, known for participating in labor transfer programs in Xinjiang that have been labeled as forced labor.

The issue of foreign entities benefiting from government tax credits is another concern raised by lawmakers. The Inflation Reduction Act prohibits “foreign entities of concern” from benefiting from tax credits offered to consumers who purchase electric vehicles. Ford’s licensing agreement with CATL may enable batteries produced in Michigan to qualify for these incentives, as the agreement does not constitute a joint venture. Ford officials express confidence that the facility will be eligible for all of the law’s benefits.

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