Two of China's largest battery makers are discovering that building factories in the United States is proving far more complicated than anticipated, particularly in the current political climate.
Gotion High-Tech, a Chinese lithium battery manufacturer, has suspended construction at its US plant following sustained local opposition and increased political pressure. Meanwhile, Contemporary Amperex Technology Co. Ltd. (CATL), the world's largest electric vehicle battery maker, is facing a new round of scrutiny over its partnership with Ford Motor Company to build a lithium iron phosphate (LFP) battery plant in Michigan.
Licensing strategy fails to shield from controversy
Unlike Gotion, CATL pursued a less direct approach by licensing its intellectual property to Ford, allowing the US automaker to fully own and operate the US$2.5 billion facility in Marshall, Michigan. The strategy was designed to avoid political backlash, but it hasn't worked as planned.
Recently passed legislation in the US House of Representatives threatens to strip federal tax credits from projects using Chinese technology or components. The bill, now under Senate review, could unravel the financial underpinnings of the Ford-CATL project. More than 100 business, academic, and civic leaders have signed a joint letter urging Congress to preserve the tax benefits.
Ford Executive Chair Bill Ford has warned that without federal subsidies, the plant, already 60% built, faces significant risk. The construction site currently employs 1,500 workers daily, and full operations are expected to create 1,700 high-paying, long-term jobs. All of that could be jeopardized if the credits are rescinded.
Local opposition mirrors broader resistance
Ironically, some local leaders and residents in Marshall are applauding the potential collapse of the project. "It is pleased to see the project may be halted," said Glenn Kowalske, Marshall's finance officer, in remarks cited by international media. Many in the community have opposed the plant from the start, citing concerns about national security, environmental impact, and the Chinese connection.
This mirrors the fate of Gotion's plant, which faced a barrage of protests and legal challenges, ultimately prompting the company to halt operations and withdraw lawsuits. While initially defending the project as a matter of sovereignty, Gotion ultimately lost momentum, especially after President Donald Trump imposed sweeping tariffs, further complicating Chinese firms' US ambitions.
Industry insiders note that American public opinion tends to prioritize environmental and ideological concerns over job creation—something that foreign firms often underestimate.
Technology transfer raises dual concerns
While Gotion opted for direct ownership, CATL took a more sophisticated path—licensing its technology to Ford while keeping its name off the ownership structure. Industry sources say the licensing fee is around 10% of production value, which is not unusually high but remains lucrative. However, the partnership raised concerns within the Chinese government over potential technology leakage, particularly in LFP technologies related to energy density optimization. As a result, insiders say CATL only transferred older-generation intellectual property, not its cutting-edge formulations.
Even if the Michigan facility becomes fully operational, questions remain about whether Ford can achieve production efficiency and cost competitiveness to match China-based rivals. Nonetheless, with US tariffs in place and tax incentives still technically available, Ford retains a relative advantage—if the legislation doesn't change.
Chinese firms adapt strategies amid barriers
Despite mounting barriers, Chinese battery makers remain keen on the US market, drawn by the enormous potential in electric vehicles and grid-scale energy storage. With China's domestic economy showing signs of stagnation, firms like CATL and Gotion are increasingly willing to take risks abroad, using the Ford partnership model as a template for entering the American supply chain.
Many are now opting for more covert methods: setting up partnerships through regional joint ventures and complex corporate layering. These strategies aim to mask Chinese involvement and sidestep geopolitical scrutiny, allowing participation in Made in America manufacturing without displaying a Chinese flag.
Legal challenges persist
The Ford-CATL plant has been under legal and political pressure since its inception. Lawsuits challenging the factory's construction, often on national security or environmental grounds, have been filed by local residents. Though earlier rulings at trial and appellate courts upheld the city's rezoning and funding decisions, a final appeal is now pending before the Michigan Supreme Court.
Article edited by Jerry Chen
