Why Ford Is Right to Rely on Chinese Battery Technology—and Why Others Should Too

In 2022, amid a multiyear frenzy over electric vehicles, Ford was studying how to cheaply power its EVs. It settled on a battery made by China’s Contemporary Amperex Technology Ltd., the biggest—and, many thought, the best—battery maker in the world. The next year, Ford went further, announcing that it would build a plant in Michigan where it would make its own batteries—using technology it would license from CATL.

Today, those decisions are politically fraught. Ford has faced repeated attacks from politicians for doing business with CATL, most recently earlier this month by Transportation Secretary Sean Duffy. But Ford isn’t backing down. It says that, given the paucity of Western-made batteries available on the market, it made the best possible choice to power an EV on which it has bet much of its tech cred.

That would be the Fathom, a midsize pickup that Ford will release in 2027 after years of development. Ford also plans to use the batteries in its new stationary storage business, which is targeting AI data centers and utility-scale power stations.

Companies outside China, including all three major South Korean battery makers, have begun to make lithium-iron-phosphate batteries, the type CATL is known for. But most industry veterans regard CATL’s as better.

CATL is “the largest battery maker in the world,” Mark Truby, Ford’s chief communications officer, told me. “They have advanced LFP technology, which we think is the right technology for [the Fathom]. It’s also good technology for battery storage.

“Would it be better if that innovation already existed [in the U.S.]? Yeah, sure, in a perfect world we wouldn’t have to license technology, or no company would. You’d have all that innovation in-house,” Truby added.

I gave a speech over Zoom last week at the University of Texas at Austin on the debate underway in the U.S. over how to confront China’s rising competitiveness and—in some cases— dominance of important frontier technologies. Drawing on the lessons of the industrial age, I argued that in the case of batteries and critical minerals, the U.S. should attempt to build a cushion of its own supply.

But otherwise, I said, the U.S. should import Chinese batteries and the components and raw materials that go into them, taking advantage of the tens of billions of dollars of Chinese investment sunk into scaling these technologies and pushing down their price, and shovel them into higher-value products in the U.S.

China’s dominance of batteries, along with the metals and components that go into them, has ignited a national security debate in the U.S. The Trump administration, along with members of Congress and leading Washington think tanks, argue that the U.S. should move to wall off Chinese-made batteries and materials and build a parallel U.S.-and-allies supply chain from scratch.

Those arguing for this approach note that Chinese firms have used heavy state subsidies to scale to their current size, and say that China is ultimately not trustworthy: that relying on a strategic rival for a critical technology is an unacceptable risk, because it can simply switch off the supply. The U.S. therefore must block Chinese supply and encourage U.S. and other Western players to step into the gap.

But that’s not how the U.S. became the dominant global economy.

In the 1880s, writes Jeffrey Ding, a professor at George Washington University, in “Technology and the Rise of Great Powers,” the U.S. raced with Germany, France and Britain to get the most out of the new invention of electricity. In all of these countries, entrepreneurs and officials recognized electricity as the most important technology of the age and built the world’s first power stations, electric trams and urban grids.

But over the succeeding decades, the U.S. got by far the greatest economic lift from this new power source because its cities, counties and entrepreneurs pushed it deeper and more broadly into the economy than their counterparts in any other country managed to. By 1913, the U.S. was deploying roughly twice the electric capacity per capita of Germany and five times Britain’s.

In other words, the winner in the electricity race was not the country that made a big breakthrough or was the first to deploy some aspects of it, but the one that best pushed that breakthrough broadly into its economy over many decades—the U.S.

Similarly, in the era’s other central new industries, chemicals and steel, Germany and England made many of the primary breakthroughs, but the U.S. ended up benefiting the most because it managed to best diffuse the products made from them into its economy.

In 1870, Germany’s economy was larger than the U.S’s by a third. By the outbreak of World War I, the American economy was two and a half times that of Germany. American industrial output exceeded the combined production of Germany and Britain.

It’s true that none of those countries was the U.S.’s main geopolitical adversary, as China currently is. That’s why I argued that the U.S. and its allies should build a cushion of capacity to produce LFP and process battery metals and components. Almost no country produces 100% of its needs—everyone imports something. But you don’t want to rely on a single source for your entire supply of something critical.

This history suggests that from a geopolitical and national economic standpoint, Ford was right to embrace CATL’s batteries.

U.S. researchers invented LFP, today’s dominant type of lithium-ion battery. But CATL and China’s BYD were the ones to improve on it and scale it up. Their LFP is widely regarded as clearly superior to competing new LFP batteries produced by South Korea’s companies and others, and combined they sell more than half of all lithium-ion batteries in the world.

Ford and Tesla have embraced China’s lead. In 2023—the year after its initial supply deal with CATL—Ford agreed to license CATL’s LFP technology, bringing in CATL engineers to help set up the equipment and show Ford employees how to use it. Ford has said it will fully operate the plant and a second in Kentucky where it also plans to make the batteries using CATL’s know-how.

In 2024, Tesla acquired LFP production equipment from CATL, and in the first quarter this year it began using it for commercial production of cells at its Nevada factory. It’s not clear why, but Tesla has not drawn the same political fire as Ford has for working with the Chinese battery giant.

What the two companies are doing aligns with the historical examples of U.S. companies embracing technology made by rivals abroad, mastering how to use it and spreading it into the economy.

It’s also the playbook China followed in the 1990s. China invited foreign carmakers into the country on the condition that they teach its automakers how to build cars. For Volkswagen, General Motors, Tesla and other major Western carmakers, China for many years became one of their largest profit centers.

Taking stock of those lessons, Chinese carmakers have now largely pushed out the foreigners and become the world’s largest exporter of cars.

“Just like 20 years ago or whatever, China companies were using U.S. [intellectual property] to get companies up and running,” Truby said. “It’ll take a few years [for U.S. companies] to be able to develop the LFP batteries that are on level with CATL’s.”

Noteworthy

Makers of flying electric taxis began their first flights under a federal program meant to get them into the air before they have obtained Federal Aviation Administration certification. Joby Aviation started demonstration flights in the Dallas area on Thursday and plans to pilot its flying taxi to 10 states over the coming months.

Chinese electric carmaker XPeng launched automated production of its humanoid robot, Iron, in China. XPeng said it plans to make 1,000 of the robots per month by the end of the year, first introducing them into its own operations.

Auto sales in China fell for the 11th straight month. According to official figures, car sales in the country fell 24% year on year in August. Chinese carmakers hope to make up the difference in sales abroad.

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Steve LeVine is editor of The Electric. Previously, he worked at Axios, Quartz and Medium, and before that The Wall Street Journal and The New York Times. He is the author of The Powerhouse: America, China and the Great Battery War, and is on Twitter @stevelevine