Ford Motor Co. has scaled back its electric vehicle (EV) plans but is simultaneously making a major push into producing batteries for energy storage. The move is enabled by the automaker’s access to Chinese technology, following a 2023 licensing deal with battery giant Contemporary Amperex Technology Co. Ltd. (CATL) for lithium iron phosphate (LFP) technology. Ford plans to use the agreement to produce larger-scale batteries for stationary storage.
“Given the fact that we already had a license to build that technology in the US, you couple that with our manufacturing experience, over a century of high-scale manufacturing, it just made a lot of sense as a natural adjacency for us,” said Lisa Drake, Ford’s vice president of technology platform programs and EV systems, during a Dec. 15 briefing announcing the company’s updated EV strategy.
The shift aligns with a broader trend in North America of battery makers transitioning from EV-focused products to grid and data center applications. EV economics in the US have cooled after support for the industry was reduced under former President Donald Trump. Meanwhile, electricity demand in the US is expected to rise 12% by 2030, with data centers accounting for more than a third of that growth, according to BloombergNEF.
Ford’s move into large-scale energy storage batteries also represents an experiment in how much Chinese technology should play a role in US industrial policy. The CATL partnership allows Ford to potentially claim valuable federal tax credits while leveraging Chinese innovation an approach that was feasible under President Joe Biden but largely restricted under Trump.
The US market has long been attractive to Chinese battery makers but politically sensitive. A subsidiary of Chinese battery company Gotion canceled plans to build a plant in Michigan this fall amid local opposition and national security concerns. Similarly, Chinese-owned Automotive Energy Supply Corp paused construction on a Kentucky facility. Ford has also faced obstacles, with Virginia Governor Glenn Youngkin rejecting plans for a CATL-based battery plant in his state and Republican lawmakers in Congress and Michigan expressing concerns. Nonetheless, Ford’s Michigan plant remains under construction and is expected to open next year.
Before announcing its Kentucky project, Ford consulted with Washington, DC officials. “Given the ongoing needs of US energy producers, it seems like a no-brainer to support efforts to produce batteries in America instead of importing more of them from China,” the company said in a statement. Potential customers also affirmed strong demand for an automaker selling energy storage cells.
Ford initially partnered with CATL because LFP batteries offer a low-cost alternative to traditional EV batteries, addressing a key barrier to consumer adoption. LFP technology is also favored in the growing energy storage market. While most clean energy subsidies were cut by Trump’s July tax law, tax benefits for batteries remain, provided companies adhere to limits on Chinese technology usage. Ford’s existing CATL license predates the law, allowing it to qualify for these benefits.
“Our business model is fully compliant with all legal requirements, and consistent with the Administration’s policy to promote US energy independence,” Ford said in a statement. A CATL representative added, “We are committed to supporting energy transition across the globe, including the US market, where we see rapidly growing demand for battery energy storage.”
Experts note that licensing deals like Ford’s can help US companies reduce reliance on imports while learning from advanced Chinese technology. “You have to learn from the best, that’s what they did,” said Bentley Allan, a political scientist at Johns Hopkins University, referencing China’s approach to acquiring cleantech knowledge.
Ford executives have emphasized that the company aims to develop its own low-cost batteries, leveraging insights from CATL. Drake highlighted the importance of the partnership, saying, “It probably would have taken us a decade to catch up and have LFP technology on our own with our own R&D.” CEO Jim Farley has also praised Chinese EV technology, noting he imported a vehicle from Xiaomi Corp. and continued using it after six months.
While the CATL technology is not at the cutting edge, experts believe it gives Ford a comparative advantage in closing the gap with leading Chinese battery makers.
“It’s possible that this could end up being an area where you are teaching Ford how to do something that Ford can ultimately do quite well,” Allan said.
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