Ford Motor, a partner of CATL (300750. SZ), stated that the battery factory jointly built by the two parties in the United States will not be affected by federal rules such as the Foreign Sensitive Entity Guidelines under the Inflation Reduction Act.
On January 7th, Ford confirmed in an exclusive response provided to Interface News that the Inflation Reduction Act and Sensitive Entity Guidelines did not exclude its technology licensing agreement with CATL from subsidy eligibility.
Ford announced in February last year that it would build a battery factory with CATL in Michigan, USA. Ford owns the new factory, while CATL provides construction and operation services and licenses patented battery technology. The factory is currently under construction.
The above factory will produce lithium iron phosphate batteries to provide support for some of Ford's car models manufactured in the United States. Lithium iron phosphate batteries and ternary lithium batteries are currently the two mainstream new energy vehicle power battery technologies.
Ford's above statement means that vehicles equipped with power batteries produced by its joint factory with CATL will still be eligible for tax credits under the Inflation Reduction Act. Ningde Times did not directly respond to this news to Interface News.
The Inflation Reduction Act, which officially came into effect at the beginning of last year, was the main reason for Ford's cooperation with CATL to build a new Michigan battery factory.
The bill aims to encourage the establishment of the lithium battery industry chain, providing a maximum tax credit of $7500 per vehicle for new energy vehicles using "Made in the United States" power batteries, but with strict standards for key minerals, components, and other sources in power batteries.
The US government released the Sensitive Entity Guidelines in December last year, which officially came into effect on January 1st of this year, specifying that vehicles with any battery components manufactured or assembled by foreign sensitive entities will lose eligibility for tax credits provided by the Inflation Reduction Act.
By 2025, this regulation will also extend to key minerals such as lithium, cobalt, and nickel required in battery manufacturing, meaning that vehicles cannot contain battery key raw materials extracted and processed by foreign sensitive entities, otherwise they will not be eligible for tax credits.
Foreign sensitive entities include individuals owned, controlled, governed, or instructed by the governments of China, Russia, North Korea, and Iran.
According to the Sensitive Entity Guidelines, all companies registered and established in China or whose Chinese government holds 25% or more of their shares will be considered foreign sensitive entities. If 25% of a company's board seats, voting rights, or equity are held by sensitive entities, the company will also be considered a sensitive entity.
This move aims to further prevent China's power battery industry chain from benefiting from subsidies under the Inflation Reduction Act.
As a result, the number of new energy vehicles eligible for tax credits has sharply decreased this year. According to information released by the US Internal Revenue Service, the number of new energy vehicle models eligible for tax credits under the Inflation Reduction Act has decreased from 43 at the end of last year to the current 19.
Since announcing the joint construction of the factory last year, the cooperation between Ford Motor and CATL has gone through multiple twists and turns. In July and September last year, US House of Representatives members wrote letters to Ford Motor, blocking the company's cooperation with CATL, stating that such cooperation may lead to the US government's subsidy funds for the new energy vehicle industry flowing back to CATL.
In addition, against the backdrop of the ongoing strike by the United Automobile Workers of America in September last year, construction work at Ford Motor's Michigan factory was halted by the company. Ford announced the restart of the factory in November last year, but the planned battery capacity will be reduced to 20 GWh, a decrease of over 40% compared to before.