Stalin is reputed to have said, “The Capitalists will sell us the rope with which we will hang them.” The variation of that quote in communist China is, “The Capitalists will finance the gallows in which we will hang them.”
The Detroit News reported today that Ford Motor Co. has struck a deal with China’s Contemporary Amperex Technology Co. (CATL) to build an EV battery plant in southwest Michigan, a project the publication claimed is worth “at least” $2.5 billion and would create “roughly” 2,500 jobs. Not surprisingly under the leadership of Gov. Gretchen Whitmer, the state’s taxpayers are going to help finance the deal, although the News said the extent of the incentives “are still taking shape.”
The proposed venture underscores the political savviness of Xi Jinping, China’s leader possibly for life, who is on record as saying that by 2049, his goal is for China to rule the world. Under the reported terms of the deal, Ford would own the land and battery plant and manage the workforce, and CATL would be the “technology partner” to develop and build lithium iron phosphate batteries.
The deal appears to be structured to comply with Congressional regulations requiring automakers to increasingly use American made electric batteries as a condition for their EVs qualifying for sweetheart tax breaks that can be as high as $7,500 a vehicle. However, the deal, if accurately reported, appears to circumvent the spirit of the Congressional regulations as they are intended to reduce China’s world dominance of EV battery manufacturing and materials.
CATL is the second Chinese-owned company receiving Michigan taxpayer money to build a battery plant in the state. Gotion Inc. has received about $200 million in taxpayer money.
The sources who leaked the story to the News knew what they were doing. The publication serves up the PR spin on how Michigan officials and Ford want the deal to be perceived, going so far as to flack Ford as, “America’s No. 2 EV company in 2022.” Ford last year sold 61,575 electric vehicles in the U.S.; Tesla sold an estimated 525,000 electric vehicles.
The News misrepresents the reason Virginia Gov. Glenn Youngkin, whose state Ford and CATL were seriously considering locating their joint venture, told the companies to go elsewhere. The News said Youngkin objected to CATL’s “alleged ties to China’s ruling communist party.”
In fact, Youngkin’s concern wasn’t solely CATL’s Chinese ownership. He was also concerned about the structure of the deal, which he said would have given CATL “full operational control” over the (plant’s) technology.
“I would have loved to have had 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,” the publication Roll Call quoted Youngkin saying in a January 20 interview with Bloomberg TV.
The Detroit News didn’t disclose details of Ford’s arrangement with CATL, including what the Chinese company will receive in exchange for providing and overseeing the technology.
The Detroit News story betrays considerable bias and diminishes increasing Republican concerns about China’s growing aggression as being an unfounded political issue intended to appeal to conservative voters.
As an example, CATL’s ties to China’s Communist Party aren’t “alleged.”
Roll Call, which covers Congress and is considered politically neutral in its reporting, quoted Mike Toman, who the publication identified as a senior fellow of the nonpartisan Resources for the Future, as saying: “Anything that is part of the larger industrial complex, the Chinese government has some connection with it. These companies don’t just go off on their own and do stuff.”
The News notes that Youngkin is “a Republican and possible 2024 presidential candidate,” but neglects to note that President Biden seriously considered governor Whitmer to be his running mate in the 2020 election. That detail is relevant here because Biden’s son, Hunter, was instrumental in helping a China-based company gain control of one of the world’s largest cobalt deposits. Cobalt is a critical component of electric vehicle batteries.
Hunter Biden’s curious involvement in China’s cobalt purchase was highlighted in this New York Times story published last November.
As noted by the Times, the Biden administration warned last year that China might use its growing dominance of cobalt to disrupt America’s retooling of its auto industry to make electric vehicles.
The respective backgrounds of Youngkin and Whitmer are worth noting. Youngkin is the former co-chief executive of The Carlyle Group, one of the world’s most influential and politically connected private equity firms. Youngkin has considerable experience understanding business deals.
By comparison, Whitmer is a career Lansing politician.
Despite Michigan’s historic role as the cradle of America’s automotive industry, the state has become the ugly duckling for EV investments. The major EV plant and battery investments have mostly gone elsewhere, including Tennessee, Georgia, Ohio, and Kansas.
In the fall of 2021, Dearborn-based Ford announced that it planned $11 billion in EV investments in Tennessee, promising to create some 11,000 jobs. Ford touted the combined investments as the biggest financial commitments in the company’s more than 100-year history.
Notably, Ford didn’t consider Michigan for the massive investments, nor did it alert Whitmer of the announcement before it was made, despite an executive stating in an earlier release the company was committed to making Michigan “a centerpiece of its focus on EVs.”
Ford manufactures its popular electric Mustang SUV in Mexico.
The News said that Whitmer in a previous interview characterized Youngkin’s rejection of the Ford/CATL deal as a “political determination.”
“We are proud that Ford is an American company, Ford is a Michigan company,” the News quoted Whitmer as saying. “We are going to compete for every opportunity for the State of Michigan.”
When one considers patriotic American corporations, Ford hardly comes to mind. The company has increasingly been moving jobs to India and Mexico, where the company last November announced the opening of an expansive “global technology and business center” on the outskirts of Mexico City.
“Ford Mexico’s Engineering Center has evolved so much in recent years that we have become a fundamental arm for the company’s global projects,” said Marcos Pérez, director Product Development at Ford of Mexico. “For many years, we thought that Mexican talent was mainly related to manufacturing, but today, we have shown that we are equally or more valuable than the design engineers in countries like Germany, Australia or the United States.”
By year-end 2021, only about half Ford’s then global workforce of 186,769 employees were in the U.S.