Lawmakers challenge Ford and Chinese battery partner over forced labor

Lawmakers challenge Ford and Chinese battery partner over forced labor

A partnership between Ford Motor and a major Chinese battery maker is facing scrutiny by Republican lawmakers who say it could make an American automaker dependent on a company linked to forced labor in China’s Xinjiang region.

In a letter sent to Ford on Thursday, the Chinese Communist Party and the chairs of the House Select Committee on the House Ways and Means Committee sought more details about the partnership, which they said was planned by Ford to employ several hundred workers from China at a new battery factory in Michigan.

Ford announced in February that it planned to set up a $3.5 billion factory using technology from Contemporary Amperex Technology Ltd., better known as CATL, the world’s largest maker of batteries for electric vehicles. CATL produces about a third of electric vehicle batteries globally and supplies to General Motors, Volkswagen, BMW, Tesla and other major automakers.

Ford has defended the partnership, saying it would help diversify Ford’s supply chain and allow less expensive and more durable batteries than existing alternatives to be made in the United States instead of imported for the first time.

But lawmakers, who previously criticized the partnership, cited evidence that CATL had not given up ownership of the company it helped set up in Xinjiang, where the United Nations have recognized Systemic human rights violations.

Following the announcement of its deal with Ford, CATL publicly sold its stake in the company, Xinjiang Zhikun Lithium Industry Co., in March. But the shares were bought by an investment partnership in which CATL had a partial stake and a Former CATL Manager Corporate records reveal who holds leadership roles in other companies owned by the battery maker.

The circumstances of the sale “raise serious questions about whether CATL is attempting to obscure the relationship of forced labor,” wrote Representative Mike Gallagher of Wisconsin, chair of the select committee, and Jason Smith of Missouri, chair of the Ways and Means Committee.

MPs also criticized the automaker’s commitment to employ several hundred Chinese workers, citing details of Ford’s licensing agreement that are with the select committee. The lawmakers said workers from China will install and maintain CATL’s equipment at the Michigan factory until about 2038. Ford has said the factory is expected to employ 2,500 US workers.

“Ford has argued that the deal will create thousands of American jobs, advance Ford’s ‘commitments to sustainability and human rights,’ and advance American battery technology,” they wrote. “But newly discovered information raises serious questions about each claim.”

Ford spokesman TR Reed said the company is studying the letter and will respond in good faith. He added that human rights are fundamental to the way Ford does business and that the automaker evaluates such issues thoroughly.

Mr Reid said, “There is a lot that has been said and implied about this project that is wrong.” “At the end of the day, we think creating 2,500 good-paying jobs in America with new multibillion investments for the great technology we’ll bring to great electric vehicles is every bit as good.”

CATL’s collaboration with Ford could be an auspicious sign for the electric vehicle industry in the United States. Critics have given the deal a name “Trojan horse” More calls for Chinese interests dissolution of partnership, If it succeeds, he says, reliance on Chinese technology could become the norm for the American electric vehicle industry.

Ultimately, China’s control of key technologies such as batteries could leave the United States “in a very vulnerable position,” said Eric Gordon, a clinical assistant professor at the University of Michigan’s Ross School of Business.

“Profit margins go to the innovators who provide the advanced technology, not to the people with screwdrivers who assemble the advanced technology,” he said.

But CATL and other Chinese companies do not have battery technology readily available from suppliers in the United States or Europe. The Michigan plant will 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 less expensive to make and more durable, able to withstand multiple charges without degrading. They also don’t use nickel or cobalt, another battery material, which is often mined with environmentally damaging methods and sometimes with child labor.

Without the most advanced or least expensive batteries, American carmakers could fall behind Chinese rivals such as BYD that are entering Europe and other markets outside China. Americans may also have to pay more for electric cars and trucks, slowing sales of vehicles that don’t emit greenhouse gases.

The battery unveiled by CATL last year provides hundreds of miles of driving range after just 10 minutes of charge.

Scott Kennedy, a China expert at the Center for Strategic and International Studies, said, “The hard truth is that the Chinese made a huge gamble on electric vehicles and dumped a trillion Chinese dollars and subsidies on the industry, and it just so happens that gamble paid off for all the aces.”

“If you decide not to partner with a very large battery maker, you are essentially committing to delay the American energy transformation,” he said.

Ford plans to use batteries made from CATL technology in low-cost versions of vehicles such as the Mustang Mach-E and the F-150 Lightning pickup. The least expensive variant of Tesla’s Model 3 sedan comes with LFP batteries which are widely reported to be supplied by CATL.

For decades, Western companies have monopolized the world’s most advanced technologies, and have sought to protect their intellectual property as well as access the Chinese market.

But China’s dominance in the production of electric vehicle batteries as well as solar panels and wind turbines has reversed that dynamic. This has created a particularly difficult 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 quickly transition to cleaner energy sources in an effort to mitigate climate change.

The nexus of the solar and electric vehicle battery industry in Xinjiang has further complicated the situation. The Biden administration has condemned the Chinese government for doing so. genocide and crimes against humanity In area.

The United States last year banned imports of products made wholly or partially in Xinjiang, saying companies operating in the region are not able to ensure their facilities are free of forced labor.

In 2022, CATL and a partner Registered a lithium processing company in the area called Xinjiang Zhicun Lithium Industry Co., which promoted plans to become the world’s largest producer of lithium carbonate, a key component of batteries.

Through a series of subsidiaries and shareholder relationships, that Xinjiang lithium company has financial ties to a Chinese power company, Tebian Electric Appliance Stock Company, or TBEA, as reviewed by the New York Times via Sayari Graph, a mapping tool for corporate ownership. TBEA has actively participated in so-called poverty alleviation and labor transfer programs in Xinjiang United States believes A form of forced labor.

While the Chinese government argues that labor transfer and poverty alleviation programs are aimed at improving living standards in the region, human rights experts say they are also aimed at pacifying and educating the population, and that Uighurs and other minority groups cannot say no to these programs without fear of detention or punishment.

CATL did not respond to a request for comment. In December, it told The Times that it was a minority shareholder in the Xinjiang company and that any form of forced labor in its supply chain was strictly prohibited.

Republican lawmakers also raised concerns about whether batteries made at Ford’s Michigan plant would qualify for a tax credit the Biden administration was offering to consumers who bought electric vehicles as part of the Inflation Reduction Act.

The law prevents “foreign entities of concern” – such as companies from China, Russia, Iran or North Korea – from benefiting from government tax credits. But because Ford is licensing the CATL technology to the plant — rather than forming a joint venture, as is often the case with automakers and battery suppliers — batteries made in Michigan may still qualify for those incentives.

The Biden administration has not yet clarified how the ban on foreign entities will be implemented. But Ford executives said they were in talks with the administration about the Michigan plant, and were confident the partnership would qualify for all the benefits of the law.

“We believe that batteries manufactured by American workers in a US plant operated by a wholly owned subsidiary of an American company qualify and should be eligible,” said Mr. Reed, a Ford spokesman.

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