US Transportation Secretary Presses Ford to Sever Battery Tech Ties With CATL and Geely

Transportation Secretary Sean Duffy holds the regulatory authority to restrict federal transit funding and shape domestic manufacturing subsidies, and on Tuesday, he directed that leverage at Ford Motor Company. In a formal letter to Ford CEO Jim Farley, Duffy demanded the automaker halt its collaborative projects with Chinese firms Contemporary Amperex Technology Co. Limited (CATL) and Geely. The administration will next review the eligibility of Ford's upcoming electric vehicles for federal tax credits, a decision that dictates whether buyers receive up to $7,500 off the purchase price at the dealership lot.[4][5]

The confrontation centers on the technology powering the next generation of affordable electric vehicles. Ford currently relies on a licensing agreement with CATL to produce lithium iron phosphate (LFP) batteries at its $3.5 billion BlueOval Battery Park in Marshall, Michigan, a facility slated to employ 2,500 workers. LFP batteries use iron rather than expensive nickel and cobalt, cutting production costs by roughly 20% and allowing automakers to price entry-level EVs closer to $35,000 for everyday buyers.[1][2]

Duffy characterized the licensing arrangement as a national security vulnerability, warning that integrating Chinese intellectual property into American manufacturing infrastructure creates an unacceptable reliance on "adversary tech." "We are deeply alarmed by Ford's continued integration of Chinese state-backed technology into the American automotive supply chain," Duffy wrote in the correspondence released Tuesday.[1][4][5][8]

The scrutiny extends beyond battery chemistry to vehicle software and platform architecture. The Department of Transportation is also examining Ford's technical relationship with Geely, the Chinese automotive conglomerate that owns Volvo and Polestar. Federal regulators have expressed concern that connected vehicle platforms sharing code or components with Geely could expose U.S. drivers' location data and driving habits to foreign surveillance.[2][3][7]

For the American car buyer, this geopolitical friction translates directly into monthly payment math. Ford has positioned the CATL partnership as the primary mechanism to lower the sticker price of its electric F-150 Lightning and Mustang Mach-E models. If the federal government forces Ford to abandon the Michigan plant's LFP strategy, the company would have to source batteries from domestic or allied suppliers at a significant premium, costs that inevitably pass to the consumer.[6]

Ford defended the partnerships as a necessary step to build a self-sufficient domestic supply chain. In a statement responding to the administration's criticism, the automaker emphasized that it maintains complete ownership and control over the Michigan battery facility. The company argued that licensing CATL's technology allows American workers to learn and eventually replicate the manufacturing process, rather than importing finished battery packs from overseas.[3][6]

The dispute highlights a structural reality in the global automotive market: Chinese companies currently control approximately 75% of the world's battery cell production capacity and process over 60% of the lithium used globally. Automakers attempting to build affordable electric vehicles face a stark choice between utilizing that established supply chain or spending billions to duplicate it from scratch over the next decade.[1][5]

The administration's pressure campaign arrives as the Treasury Department finalizes the 2026 guidance for the Section 30D clean vehicle credit. If regulators classify the licensed CATL technology as a "Foreign Entity of Concern" (FEOC) product, vehicles utilizing those batteries will immediately lose eligibility for consumer tax credits, effectively raising their price by up to $3,750 or $7,500 overnight depending on the final Treasury ruling. Ford and its competitors now await the final Treasury determination expected next month, which will dictate the financial viability of their current manufacturing strategies.[4][7][8]