Ford’s suspension of JV plant with CATL may benefit Korean battery makers

[Courtesy of Ford Korea]

American automotive giant Ford Motor has temporarily suspended plans to build a joint battery factory with China’s Contemporary Amperex Technology Co. Limited (CATL), which could benefit South Korean battery companies trying to expand their presence in the U.S. market.

On Monday (local time), Ford announced the suspension of the construction of a joint battery factory in Marshall, Michigan. The company clarified that this pause in construction is temporary and will continue until it is confident that the factory can operate competitively, emphasizing that it is not a final decision.

Ford previously declared its ambitions to surpass Tesla by producing low-cost, high-efficiency lithium iron phosphate (LFP) batteries at the Michigan battery plant starting in 2026.

The U.S. Inflation Reduction Act (IRA) incentivizes electric vehicle manufacturers to assemble their final products in North America while meeting specific criteria related to battery components and core mineral sourcing. However, there has been growing controversy in Washington, D.C. over Chinese technology and capital flowing into the construction of battery joint factories in the United States, potentially circumventing the IRA’s intent. Some Chinese companies, including CATL, have announced partnerships with American automakers to build battery factories in the country, which some argue could undermine the IRA’s objectives.

The Korean battery industry is now eyeing the opportunity, with LG Energy Solution, SK on, and Samsung SDI all speculating that Ford’s recent decision could bolster their market share in North America as Korean battery companies that qualify for IRA benefits could potentially benefit from the situation. This anticipation stems from the expectation that Korean battery companies will maintain a strong negotiating position in the U.S. market following Ford’s decision.

The three Korean battery manufacturers have been aggressively investing in the North American market since the IRA was announced, expanding their production facilities. LG Energy Solution, SK on, and Samsung SDI are planning to produce batteries with annual capacities of 294 gigawatt-hours (GWh), 183.5 GWh, and 67 GWh respectively in North America.

LG Energy Solution and SK on, who are already on Ford’s supplier list, are expected to collaborate even more closely with the U.S. company. For its part, SK on is set to produce batteries with a capacity of 127 GWh through its joint venture with Ford, BlueOval SK.

LG Energy Solution is also pursuing the construction of a battery joint factory with Ford and Koç in Turkey.