Photo: Ford, CATL | Edited
Korean battery manufacturers were riding high on the EV wave, but the good old days are about to end. Traditional carmakers like Volkswagen, General Motors, and Ford are switching one by one to cheaper batteries using CATL’s LFP chemistry. Ford is the latest to announce a partnership with the Chinese battery manufacturer, including a production facility in Michigan.
Having the most advanced technology in the world is every company’s dream, and in the EV battery industry, Korean and Japanese manufacturers were at the top of the food chain. Their NMC and NCA cells boasted the highest energy densities, so every car manufacturer signed up to have their batteries produced with these cells. But sometimes, having the best of the best is not good enough if you can’t find enough customers willing to pay for cutting-edge technology.
A new battery technology has emerged in the past years, using much cheaper materials. The lithium-iron-phosphate (LFP) chemistry, mainly developed by Chinese companies, promises to offer a cost-effective alternative to ternary cells with few downsides. Sure, they are heavier due to the iron used and have a lower energy density. Still, they are much cheaper and usually endure more cycles than nickel-rich Li-Ion batteries. These advantages have attracted EV makers’ interest, but they only entered the mainstream once Tesla used them for its base versions of the Model 3 and Model Y.
Tesla is also the catalyst of large-scale adoption of the new chemistry. It might not have wanted it, but the massive price cuts operated in January have pushed the other EV makers on edge. They are faced with a tough choice between keeping prices up (and losing market share) or following Tesla with price cuts, essentially buying market share. Either way, they must cut costs, and cheaper batteries are a good place to start.
That’s why EV makers are increasingly courting CATL, the world’s largest producer of LFP cells. Only recently, General Motors abandoned plans to build its fourth battery-manufacturing facility with Korea’s LG Energy Solution. Although it didn’t say why it dropped the project, it’s obvious that GM cannot go forward without considering LFP technology. Having all the eggs in the same basket with LGES is not wise, and Mary Barra finally understands that.
Volkswagen and Ford are also mulling replacing Korean NMC batteries with cheaper LFP cells supplied by CATL. Ford is already doing it and is poised to announce strengthening the partnership with the Chinese company. According to Detroit News, the Blue Oval will announce a new battery factory in Michigan at an event planned for Monday. The new factory will produce LFP batteries for the carmaker, but the partnership is rather interesting.
Unlike the Ultium joint venture that GM established with LGES, the Ford-CATL factory would be operated solely by Ford. The U.S. carmaker will own the land and the production facility and manage the workforce. As such, it would be like any other Ford plant. Nevertheless, it would use CATL’s technology and know-how to develop and build LFP cells. The project will be based in Marshall, Michigan, near the intersection of I-69 and I-94, both key commercial corridors.
The Ford-CATL battery plant was long in the making, as the two companies announced their plans a year ago. Nevertheless, the final location has not been officially unveiled yet, and what we know is based on confidential discussions. The carmaker will invest $2.5 billion of its own money, while the state is also putting $1 billion in incentives, including cash and site development funds.
Although Ford decided to produce LFP cells with CATL a long time ago, the partnership has not been without controversy. Michigan and Virginia have aggressively pursued the plant, but the latter withdrew from the race a month ago. Virginia Gov. Glenn Youngkin explained the decision saying that the plant would serve as a Trojan horse for China into the U.S.
Given the complicated relations between the two economic powers, it’s hard to imagine how a Chinese battery manufacturing facility in the U.S. would play out. One thing is sure: producing LFP cells at scale would not be possible without CATL.
A new battery technology has emerged in the past years, using much cheaper materials. The lithium-iron-phosphate (LFP) chemistry, mainly developed by Chinese companies, promises to offer a cost-effective alternative to ternary cells with few downsides. Sure, they are heavier due to the iron used and have a lower energy density. Still, they are much cheaper and usually endure more cycles than nickel-rich Li-Ion batteries. These advantages have attracted EV makers’ interest, but they only entered the mainstream once Tesla used them for its base versions of the Model 3 and Model Y.
Tesla is also the catalyst of large-scale adoption of the new chemistry. It might not have wanted it, but the massive price cuts operated in January have pushed the other EV makers on edge. They are faced with a tough choice between keeping prices up (and losing market share) or following Tesla with price cuts, essentially buying market share. Either way, they must cut costs, and cheaper batteries are a good place to start.
That’s why EV makers are increasingly courting CATL, the world’s largest producer of LFP cells. Only recently, General Motors abandoned plans to build its fourth battery-manufacturing facility with Korea’s LG Energy Solution. Although it didn’t say why it dropped the project, it’s obvious that GM cannot go forward without considering LFP technology. Having all the eggs in the same basket with LGES is not wise, and Mary Barra finally understands that.
Volkswagen and Ford are also mulling replacing Korean NMC batteries with cheaper LFP cells supplied by CATL. Ford is already doing it and is poised to announce strengthening the partnership with the Chinese company. According to Detroit News, the Blue Oval will announce a new battery factory in Michigan at an event planned for Monday. The new factory will produce LFP batteries for the carmaker, but the partnership is rather interesting.
Unlike the Ultium joint venture that GM established with LGES, the Ford-CATL factory would be operated solely by Ford. The U.S. carmaker will own the land and the production facility and manage the workforce. As such, it would be like any other Ford plant. Nevertheless, it would use CATL’s technology and know-how to develop and build LFP cells. The project will be based in Marshall, Michigan, near the intersection of I-69 and I-94, both key commercial corridors.
The Ford-CATL battery plant was long in the making, as the two companies announced their plans a year ago. Nevertheless, the final location has not been officially unveiled yet, and what we know is based on confidential discussions. The carmaker will invest $2.5 billion of its own money, while the state is also putting $1 billion in incentives, including cash and site development funds.
Although Ford decided to produce LFP cells with CATL a long time ago, the partnership has not been without controversy. Michigan and Virginia have aggressively pursued the plant, but the latter withdrew from the race a month ago. Virginia Gov. Glenn Youngkin explained the decision saying that the plant would serve as a Trojan horse for China into the U.S.
Given the complicated relations between the two economic powers, it’s hard to imagine how a Chinese battery manufacturing facility in the U.S. would play out. One thing is sure: producing LFP cells at scale would not be possible without CATL.
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