When Ford announced last month that it plans to build an electric vehicle battery plant in the company’s home state of Michigan, one key element of the development was not mentioned – Ford’s partner in the new plant has direct ties to the Chinese Communist Party.
Ford announced that its new plant will use the services of Contemporary Amperex Technology (CATL), a Chinese manufacturer of lithium iron phosphate batteries, which was founded by Zeng Yugun, who has been identified as a member of the Chinese People’s Political Consultative Conference (CPPCC). This body has been described by the U.S. government as a “critical coordinating body” of the Chinese Communist Party’s (CCP) Politburo Standing Committee. It is also one of the highest-ranking entities overseeing China’s “United Front” system—an organization which conducts overseas activities in support of the Chinese government and its strategic goals.
Both Ford and Michigan’s Democratic Governor Gretchen Whitmer lauded the proposed plant as a big win for Michigan. Ford had long sought to build its new factory in Virginia but was turned down by Governor Glenn Youngkin (R-VA) because of CATL’s ties to China’s Communist regime.
“I would have loved to have Ford come to Virginia and build a battery plant [if they] were not using it as a front for a company that is controlled by the Chinese Communist Party,” Youngkin said.
China is no stranger to the electric vehicle industry. Back in 2015, Beijing published its “Made in China 2025” plan, which identified electric vehicles as an important avenue toward dominating global markets.
One of the quickest ways Chinese officials foresee accomplishing their goals is via trojan-horse style “overseas investment in or takeovers of foreign firms,” according to Cui Dongshu, secretary general of the China Passenger Car Association. In a 2018 interview, he emphasized that foreign technology could be utilized to reinforce China’s own domestic EV production, which has a recent history of underperformance and safety malfunctions. This could be why last year, China’s CATL and the U.S.’s Ford Motor Company announced a memorandum of understanding outlining global strategic cooperation “including supplying batteries in China, Europe and North America.”
However, alignment with China’s strategic production agenda is not the only aspect of this deal which should give our political leaders some pause. The proposed site in southwestern Michigan—nicknamed the “Marshall Megasite”— located just west of Marshall and just east of Ceresco on the northern bank of the Kalamazoo River, is also less than 10 miles from Battle Creek, Michigan. What is interesting about Battle Creek? For starters, it is home to the Hart-Dole-Inouye Federal Center which houses one of the Defense Logistics Agency’s Installation Management Field Offices of the Midwest. This specific office, according to DLA’s own website, is a “worldwide organization whose mission is to deliver superior support that includes force readiness; force protection…[and] facilities and equipment life cycle management…” among other services.
The city is also home to Battle Creek Air National Guard Base, home to the 110th Wing of the Air National Guard. This particular base regularly conducts various personnel readiness exercises, but also acts as an operation center for MQ-1 Predator and MQ-9 Reaper unmanned aerial vehicles for the Third Air Force which is headquartered at Ramstein Air Base in Germany. The Third Air Force (3 AF) is responsible for all U.S. air forces in Europe and Africa and actively supports America’s European and African Commands. Granting a Chinese company access to land so close to the base raises questions about potential risk to America’s national security.
Michigan has a long history as a national security and defense hub of the United States—as does Virginia, the company’s original targeted destination. Virginia Governor Youngkin recognized the potential threat such an installation could pose and blocked its approval, citing concerns over “economic security and Virginians’ personal privacy.” His veto also reassured the public that “companies with known ties to the Chinese Community Party [would not] receive a leg up from the Commonwealth’s economic incentive packages” — public money available to encourage investment and development within the commonwealth.
However, Michigan’s governor Whitmer has taken a very different approach. On Monday, Whitmer touted the CATL/Ford decision to build a factory in Marshall as “thrilling,” stating that she couldn’t imagine how she might feel “if this announcement was happening in another state.” The state of Michigan has pledged a $210 million grant from its Strategic Outreach and Attractive Reserve (SOAR) Fund to develop the site for the two companies. Additionally, the state’s Economic Development board has approved a 15-year tax abatement for the companies worth an estimated $772 million, along with a $36 million loan from local Marshall development organizations to be repaid using state funds. Altogether, the state has promised nearly $1 billion in publicly funded economic incentives for the two companies to locate their new factory in Michigan.
Proponents of the deal have attempted to assuage the concerns of skeptics, citing Ford’s primary ownership of the land and factory as security enough against foreign entanglements. Yet, these assumptions downplay the important role which the Chinese company is bound to play in the eventual operation—should the deal be affirmed. In fact, Beijing, at the behest of senior Chinese leaders, has taken measures to ensure that the core technology necessary to produce such vehicles will not be shared at all with the American auto manufacturer, leaving Ford entirely at the whim of CATL and the Chinese government.
Earlier this month, Senator Marco Rubio (R-FL) sent a letter to U.S. Secretary of the Treasury Janet Yellen, Secretary of Energy Jennifer Granholm, and Secretary of Transportation Pete Buttigieg calling for an immediate Committee on Foreign Investment in the United States (CFIUS) review of the licensing agreement between CATL and Ford. His letter emphasizes concerns that public money available through President Biden’s so-called Inflation Reduction Act will go toward a PRC-nationalized, CCP-linked company—thus “using taxpayer funds to subsidize the Chinese Communist Party’s human rights abuses” and other concerning acts.
The Foreign Investment Risk Review Modernization Act of 2018 redesigned and retooled the CFIUS review process for foreign corporate and real estate deals. The statutory and regulatory focus of the law revolves around ownership and control, which can be loosely defined by CFIUS to include majority or minority controlling partners. The 2018 redesign also gave the committee more authority over transactions and the right to require submissions for approval regardless of whether such a submission was volunteered by the interested parties. This new power gives CFIUS full legal authority to get involved in deals such as this one, although it has so far chosen not to do so. It remains to be seen whether any of the secretaries or the rest of the CFIUS board will take any action toward the concerns raised by Rubio’s letter.
