Rubio demands Biden investigate Ford's deal with Chinese battery maker
Washington — Sen. Marco Rubio, R-Florida, is asking the Biden administration to investigate Ford Motor Co.'s plans to build a $3.5 billion battery plant in Marshall and to withhold any federal aid that may benefit the Chinese company it is licensing technology from.
It is the latest reflection of how ongoing political and economic tension between the United States and China has introduced new challenges for automakers seeking to ramp up electric vehicle production in a global battery supply chain dominated by China.
Ford will own and operate the recently-announced plant, which is expected to come online in 2026 and build lithium iron phosphate batteries for the automaker's electric vehicles. But the battery cell technology will be licensed from Contemporary Amperex Technology Co. Ltd., or CATL, which is based in China and is the world's leading EV battery maker.
Rubio wrote a letter to the U.S. Departments of Treasury, Energy and Transportation on Monday requesting a review of the plan by the Committee on Foreign Investment in the United States, an interagency group that reviews foreign investment in the United States for potential national security risks.
He also demanded that no federal funds "go to enrich (People's Republic of China) champion CATL, or any other Beijing-supported company, directly or indirectly."
That should especially apply to funding and tax credits from the Inflation Reduction Act, he added, which includes billions in federal subsidies for domestic battery manufacturing. Ford said earlier this week that the subsidies were a major part of why the Dearborn automaker chose the United States rather than Mexico or Canada for the project.
"The exact structure of this arrangement has yet to be reported, but policymakers should be clear-eyed about one takeaway: if Chinese companies like CATL are able to exploit both Chinese and United States incentives for battery and EV technology through clever corporate arrangements, then there is no use in investing federal funds toward industrial development in the first place," Rubio wrote. "Taxpayer dollars should never be used to support PRC champions."
Melissa Miller, a spokesperson for Ford, said CATL will not get any U.S. tax dollars.
"Ford will wholly own and control the new battery facility, which will initially create 2,500 good U.S. jobs, with no foreign investment," Miller said in response to Rubio's letter. CATL's "involvement is simply as a source of technology and expertise that will be licensed to us."
T.R. Reid, director of corporate and public policy for Ford, said 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."
After a CFIUS review, the president can suspend or block a business transaction if there is "credible evidence" that it would threaten national security, according to the nonpartisan Congressional Research Service. Between 2017 and late 2022, 17 deals had been blocked through the process, primarily related to semiconductors or financial services.
A foreign investment that is covered by CFIUS includes mergers, acquisitions or takeovers "that could result in foreign control of any United States business" or control of critical infrastructure that could impact national security, according to the Congressional Research Service.
A spokesperson for the U.S. Treasury did not immediately respond to a request on whether the Ford project would be eligible for tax incentives, but the White House touted the investment in a release Wednesday.
Ford's project "will lead to good-paying jobs that Americans can raise a family on, the revitalization of entire communities that have often been left behind, and America leading the world again in the industries that drive the future," the administration said.
Michigan Economic Development Corporation CEO Quentin Messer Jr. said in a statement that any suggestion that Ford would not be the sole owner of the plant is "absolutely false," adding that it's crucial to "think globally in order to bring world class technology and bring the jobs of the future to the US."
"The real national security risk is not having domestic supply chains," Messer said. "To insulate our economy, we must reverse decades of jobs and technology going overseas — and we are leading that effort right here in Michigan. Through (the agreement with CATL) Ford is looking to onshore this technology and, in the process, create U.S. manufacturing jobs and improve supply chain security on a critical technology as the country moves to increased electric vehicle adoption."
Other Republicans have raised concerns about Ford's licensing agreement with CATL.
On Thursday, a group of eight Republican state lawmakers sent a letter to Gov. Gretchen Whitmer saying it is "inconceivable" that the project would receive any state funding and demanding that her administration end discussions with CATL.
Virginia Gov. Glenn Youngkin, a potential 2024 GOP presidential contender, said he pulled out of competition for the plant due to the agreement with the Chinese company.
"The Biden Administration won’t quit pushing their leftist green agenda even though it makes us dependent on China," tweeted Rep. Steve Scalise of Louisiana, who serves as the U.S. House majority leader. "This from Ford shows certain companies are fine with that. Shameful. Now more than ever we shouldn’t be relying on China for anything."
Sen. Marsha Blackburn, a Republican from Tennessee, tweeted on Monday that she was "deeply concerned" about the new plant.
"It is inappropriate for US corporations to partner with an adversary in order to sneak into our country," she wrote. "We want all American companies to succeed in America — not by doing business with the CCP (Chinese Communist Party.)"
Bloomberg reported Thursday that the Chinese government, too, will be looking closely at CATL's deal with Ford. Chinese officials are concerned that Ford could get undue access to CATL's technology, Bloomberg reported, citing anonymous sources, and plan to check whether any people it has sanctioned are involved in the project.
Ford said it is "not aware of any outreach by Chinese government officials on this matter."
rbeggin@detroitnews.com
Twitter: @rbeggin