Ford is flirting with China’s CATL, the world’s largest manufacturer of lithium-ion batteries. The two companies have arrived at an unconventional business arrangement where Ford will license battery technology from CATL, but the Chinese company will not own or operate the factory in Michigan. Ford is not placing all its eggs in one basket, however. It has forged deep ties with SK On, a South Korean battery company. Together, the two companies plan to build a number of battery factories in the United States.
Battery factories are good news, but in order to qualify for tax credits for those batteries, a certain percentage of the materials and components inside them have to be manufactured in the US or one of the countries America has a special economic relationship with. The purpose of that provision in the IRA is to cut China out of the battery manufacturing supply chain. That’s not an easy thing to do, as China is now responsible for more than 80% of all battery materials in the world.
We can blame that on the hazy glow of good feeling that the notion of globalization used to cast on the world economy — a time when it mattered little where stuff was made just as long as it was produced cheaply. Now the folly of that policy is biting hard, as the nations of the world awake to the bitter reality that they have sacrificed virtually all their economic and technical prowess in the name of lower prices.
Canada is one of the nations smiled upon by US economic policy. It also has demonstrated a willingness to offer incentives to major corporations that bring new employment opportunities to Canadian citizens. As a result, Volkswagen, GM, and now Ford have selected Canada as the site for new battery factories that will serve the North American market.
Ford, SK On, & EcoProBM Joint Venture
On August 17, 2023, SK On, EcoProBM, and Ford announced an investment of $1.2 billion (Canadian) to build a cathode manufacturing facility that will provide materials for future electric vehicles from Ford. The new factory will be located in Bécancour, a city located 150 km east of Montreal in a region that is rapidly becoming known as a hub for the electric car industry.
Once production begins in the first half of 2026, the site will have the capacity to produce up to 45,000 tons of so-called cathode active materials annually. This new facility — Ford’s first investment in Québec — is part of its plan to localize key battery raw material processing in regions where it produces EVs.
“Ford has been serving customers in Canada for 119 years, longer than any other automaker, and we’re excited to invest in this new facility to create a vertically integrated, closed loop battery manufacturing supply chain in North America designed to help make electric vehicles more accessible for millions of people over time,” said Bev Goodman, president and CEO for Ford of Canada. “We’re excited for the opportunity for our first ever investment in Québec with a new facility that will help shape the EV ecosystem there.”
Ford employs approximately 7,000 people in Canada, while an additional 18,000 people are employed in the more than 400 Ford and Ford-Lincoln dealerships across the country.
EcoPro CAM Canada LP will manufacture cathode active materials and high quality nickel cobalt manganese for rechargeable batteries that are expected to allow higher performance levels and improved EV range in comparison to existing products, thanks in part to EcoPro’s core shell gradient (CSG) technology.
Construction has already begun on the 280,000 square meter (3 million square foot) site, which will include a 6-story building, and it will create approximately 345 new jobs for Canadians — from engineers and sales and service professionals to co-op positions for students from local universities and colleges in Québec.
EcoPro CAM Canada LP also will pursue research and development activities aiming at increasing battery safety and performance as well as increasing productivity and minimizing the environmental footprint of its manufacturing process. SK On and Ford will become investors once the deal is closed. EcoProBM will oversee the day-to-day operations of the facility.
National & Local Incentives Sweeten The Pot
The prospect of adding a significant number of manufacturing jobs has convinced the Canadian and provincial governments to kick in $644 million to bring the manufacturing plant to Québec, according to the CBC.
For SK On, the new facility is part of its efforts to secure a stable supply of key battery materials in North America. It operates two battery factories in the region and is adding four more plants with its partners in North America. Its annual production capacity in North America is expected to reach more than 180 GWh — enough to power about 1.7 million EVs a year — when all those factories reach full production by the end of 2025.
For EcoProBM, Canada is the second global market expansion after Hungary and marks the company’s entry into North America. In 2021, it established a complete cathode material ecosystem in Pohang, Korea, for the handling of everything from recycling waste batteries to producing lithium, precursors, and cathode materials.
“By expanding here in North America, EcoProBM looks forward to globalizing our growth in cathode materials, which has been a unique strength of our company,” said Jae-hwan Joo, EcoProBM CEO. “We also are prepared to contribute to the community in Canada and Québec and contribute to the development of the local economy, including by hiring locally.”
Support from both the federal and provincial governments was vital to securing this joint investment for Canada and Québec. “This investment once again shows that Canada is the green strategic partner of choice for world leaders in the automobile industry,” said François-Philippe Champagne, minister of innovation, science, and industry for Quebec proviince.
“Today, we are helping to further position Quebec as a key hub in the electric vehicle supply chain, as we continue to build our battery ecosystem. This investment is good for the environment and for the economy, and it will ensure well-paying jobs for years to come.”
The Takeaway
There are a number of factors in play here. First, the government of Canada is under some pressure to match the generous production incentives contained in the Inflation Reduction Act. Joe Manchin is furious, of course, because he doesn’t want any US dollars going to benefit foreign corporations. But Manchin needs to see the bigger picture. The thrust of the IRA was to cut into China’s dominance in EV battery technology and this deal shows that is what’s happening.
Second, a rising tide lifts all boats. If Canada establishes a battery materials supply chain, that is good for American companies and American consumers. Finally, Ford is building relationships with global partners that will allow it to build the electric vehicles that America needs in order to meet its emissions reduction targets.
The IRA primed the pump and the benefits are just beginning to flow. The Red Team promised to make America great again, but had nothing but a slogan and some hats made in China to show for all its bombast and chest-thumping. The Biden administration is getting it done by building new industries and providing new clean tech employment opportunities. In this case, actions speak louder than tweets.
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