In 2024, Ford Motors cut back production on their F-150 Lightning, the electric version of their popular pickup truck. Sales on the Lightning had tanked, in part because it costs more than its gas-powered counterpart.
The High Cost of Electric Vehicles in the US
The average price of a new EV in the US is about $55,000, making electric cars a hard sell for most US consumers at a time when EV adoption is critical for our climate goals.
The Battery’s Role in EV Costs
Roughly 40% of the cost to produce an electric vehicle is in the battery. In 2023, it was reported that Ford was looking at sites in Virginia or Michigan for a new battery plant that could help lower its costs.
The Chinese Connection: CATL and Ford’s Battery Plant Proposal
Ford would use the battery technology from a company based in Fujian Province, China. That company is CATL, the largest battery maker in the world.
Political Pushback: Virginia Governor Kills Battery Plant Proposal
Virginia’s governor decided to kill the battery plant proposal in his state because of its links to China, citing influence from the Chinese Communist Party.
Trade Wars and the Global EV Market
This battery plant got caught up in a broader trade war between the US and China, in reaction to the extraordinary rise of China’s electric vehicle market.
China’s Dominance in the EV Market
China makes up over half of all EV sales globally and has brought slick and affordable electric cars to the market in just a few short years.
Government Support Propels Chinese EV Battery Companies
China’s success in EV batteries is due to significant government support, including subsidies, cheap land leases, and loans from state-owned banks.
The Rise of Consumer EV Sales in China
Consumer EV sales in China exploded due to government subsidies and benefits like discounts on charging, favorable parking, and traffic congestion-related policies.
Protecting Domestic Battery Industry
To protect their battery industry, the Chinese government required foreign car companies to use Chinese-made batteries to qualify for consumer subsidies.
China’s Control Over Battery Supply Chain
Chinese companies control significant percentages of the world’s supply of minerals needed for batteries and dominate the refining and manufacturing processes.
Innovations in Battery Technology
Chinese companies have led the world in battery innovation, developing technologies like lithium iron phosphate (LFP) batteries, which avoid the use of expensive minerals like nickel and cobalt.
Global Expansion of Chinese Battery Plants
CATL has built battery plants in Germany and plans to build one in Hungary for the European auto market. Ford’s CATL battery plant found a home in Marshall, Michigan, triggering a US House investigation.
The Challenge for US Automakers
US automakers struggle to give consumers affordable EV options, as Chinese EV batteries remain virtually impossible to avoid in the global transition to electric vehicles.
The Future of US Battery Industry
The US is investing in its battery industry, with Bloomberg estimating it would cost $82 billion to meet domestic demand by 2030. However, immediate solutions are needed to transition to electric vehicles and reduce dependence on fossil fuels.
