Home Politics Lawmakers challenge Ford and Chinese battery partner over forced labor – UnlistedNews

Lawmakers challenge Ford and Chinese battery partner over forced labor – UnlistedNews

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Lawmakers challenge Ford and Chinese battery partner over forced labor

 – UnlistedNews

A partnership between Ford Motor and a major Chinese battery maker is facing 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 House Select Committee on the Chinese Communist Party and the House Ways and Means Committee demanded more information about the association, including what they said was a plan 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 the $3.5 billion factory using technology from Contemporary Amperex Technology Ltd., known as CATL, the world’s largest maker of batteries for electric vehicles. CATL produces around a third of the world’s electric vehicle batteries 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 allow a battery that is less expensive and more durable than current alternatives to be made in the United States for the first time, rather than imported.

But the lawmakers, who have previously criticized the association, cited evidence that CATL had not relinquished its ownership of a company it helped establish in Xinjiang, where the United Nations has identified systemic violations of human rights.

CATL publicly sold its stake in the company, Xinjiang Zhicun Lithium Industry Company, in March after its deal with Ford was announced. But the shares were bought by an investment company in which CATL owned a partial interest and a ex-manager CATL who holds leadership positions at other companies owned by the battery maker, corporate records show.

The circumstances of the sale raise “serious questions as to whether CATL is attempting to conceal links to forced labor,” wrote Representatives Mike Gallagher of Wisconsin, chair of the select committee, and Jason Smith of Missouri, chairman of the Ways and Means Committee.

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

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

TR Reid, a Ford spokesman, said the company was reviewing the letter and would respond in good faith. He said that human rights were central to the way Ford did business, and that the automaker was careful in assessing such issues.

“A lot of things have been said and implied about this project that are incorrect,” Reid said. “At the end of the day, we believe that creating 2,500 high-paying jobs with a new multi-billion dollar investment in the US for great technology that we will apply to large EVs is good by all accounts.”

CATL’s collaboration with Ford could be a benchmark for the electric vehicle industry in the United States. Critics have called the deal “Troy Horse” for Chinese interests and asked sinking the association. If successful, they say, reliance on Chinese technology could become the norm for the US EV industry.

Ultimately, China’s control over key technologies like batteries could leave the United States “in a much weaker position,” said Erik Gordon, a clinical assistant professor at the University of Michigan’s 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 have battery technology that is not readily available from US or European suppliers. The Michigan plant would be the first in the United States to produce so-called LFP batteries that use lithium, iron and phosphate as their main active materials.

They are heavier than the lithium-nickel-manganese batteries currently used by Ford and other automakers, but they are less expensive to manufacture and more durable, capable of withstanding numerous charges without degrading. They also do not use nickel or cobalt, another battery material, which are often mined in environmentally harmful ways and sometimes by child labor.

Without the most advanced or least expensive batteries, US automakers could fall behind Chinese rivals like BYD, which are entering Europe and other markets outside of China. Americans may also have to pay more for electric cars and trucks, which would reduce sales of vehicles that do not emit greenhouse gases.

A battery introduced by CATL last year offers hundreds of miles of range after just a 10-minute charge.

“The hard truth is that the Chinese took a big chance on electric vehicles and invested more than a trillion Chinese dollars and subsidies in this industry, and it just so happens that the gamble turned out to be a success,” said Scott Kennedy, a China expert at the Center for Strategic and International Studies.

“If you choose not to partner with a very large battery manufacturer, you are essentially committing yourself to delaying the US energy transition,” he added.

Ford plans to use batteries made with CATL technology in lower-priced versions of vehicles like the Mustang Mach-E and the F-150 Lightning pickup truck. The least expensive version of Tesla’s Model 3 sedan comes with an LFP battery that CATL has widely reported to have supplied.

For decades, Western companies have had a monopoly on the world’s most advanced technologies and have sought access to the Chinese market while protecting their intellectual property.

But China’s dominance in electric vehicle batteries, as well as in the production of solar panels and wind turbines, has changed 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 quickly transition to cleaner energy sources to try to mitigate 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 carrying out 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, saying companies operating in the region cannot guarantee their facilities are free of forced labor.

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

Through a series of subsidiaries and shareholder relationships, that Xinjiang lithium company has financial ties to a Chinese power company, Tebian Electric Apparatus Stock Company, or TBEA, according to records The New York Times reviewed through the Sayari Graph, a mapping tool for corporate ownership. TBEA has participated widely in the so-called poverty alleviation and labor transfer programs in Xinjiang that United States considers 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 indoctrinating the population, and that Uyghurs and other minority groups cannot refuse these programs without fear of arrest or punishment.

CATL did not respond to a request for comment. In December, he told The Times that he was a minority shareholder in the Xinjiang company and that it strictly prohibited 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 the Biden administration was offering to consumers who bought electric vehicles as part of the Inflation Cut Act.

The law prohibits “foreign entities of interest,” such as companies in China, Russia, Iran or North Korea, from taking advantage of government tax credits. But because Ford is licensing CATL technology to the plant, rather than forming a joint venture, as has often been the case with automakers and battery suppliers, Michigan-made batteries can still qualify for those incentives.

The Biden administration has not yet clarified exactly how the restriction will apply to foreign entities. But Ford officials said they had been in talks with management about the Michigan plant and were confident the association would qualify for the full benefits of the law.

“We believe that batteries built by American workers at a US plant managed by a wholly owned subsidiary of an American company will and should qualify,” said Reid, the Ford spokesman.

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