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How China worries drove Youngkin to spurn a massive Ford battery plant

Virginia Gov. Glenn Youngkin shakes hands with his cabinet before delivering his State of the Commonwealth to a joint session of the General Assembly inside the House chamber of the State Capitol Building in Richmond, Va. on Wednesday, Jan. 11, 2023. (G3 Box News Photo/John C. Clark) John C. Clark/G3 Box News

How China worries drove Youngkin to spurn a massive Ford battery plant

Jeremy Beaman

January 20, 03:30 AM January 20, 06:08 AM

Gov. Glenn Youngkin’s (R-VA) decision that Virginia will not compete for a planned Ford-owned battery factory due to the legacy automaker’s business relationship with a Chinese battery giant drew a clear political line in the sand at a time when states are aggressively competing for new manufacturing jobs no matter the developer’s national origin.

The resolution not to lure Ford with generous incentives came as the Biden administration and vehicle makers work to increase quickly the manufacture of batteries domestically to supply the growing electric vehicle market and to make the most of clean vehicle tax credits Democrats authorized with the Inflation Reduction Act.

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It also reflects the increasing hawkishness within the GOP toward China, a country with a near-monopoly on the manufacture of key technologies such as batteries, solar panels, and other components used for green energy technologies.

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Youngkin directed the Virginia Economic Development Partnership to remove the commonwealth from consideration for the battery plant in December.

The first-term governor brought the issue back up after his recent State of the Commonwealth speech and has described the Ford venture, which reportedly entails the construction of a Ford-owned plant that would be operated by Chinese battery pioneer CATL, as a “front” for the Chinese Communist Party.

“We felt that the recent efforts to put forward a plan that would house Chinese technology, to build the batteries, was, in fact, representative of that,” Youngkin told reporters on Sunday. “And that we felt that the right thing to do was to not recruit Ford as a front, for China, to America, let’s develop our own technology.”

Ford went public with plans in July 2022 to expand battery manufacturing capacity in the United States and to do so in partnership with CATL, a massive battery cell manufacturer that has supply arrangements in place with big-name automakers, including Tesla and Volkswagen.

The plan provided for the company to localize and use approximately 40 gigawatt-hours of lithium iron phosphate battery capacity in North America starting in 2026.

Ford also announced a separate memorandum of understanding with CATL to “explore a cooperation for supplying batteries for Ford vehicles in markets across North America, Europe, and China,” according to a Ford spokesperson, who said talks with CATL continue but offered no further details.

The company has been otherwise tight-lipped about where things stand with its expansion plans and its business relationship with CATL. Details about sites of interest were reported on Dec. 14 by Bloomberg, whose story said Ford was interested in locations in Michigan and Virginia for a plant.

The prospective plant is a $3.5 billion investment and would have created an estimated 2,500 jobs in rural southern Virginia near the North Carolina border, the Richmond Times-Dispatch reported Monday. The company would not confirm those details, but it did seek to clear up confusion about the progression of events, confirming Thursday that it has not selected a site.

Youngkin’s office is marketing his decision as choosing state residents over China and sparing their tax dollars.

“Virginians can be confident that companies with known ties to the Chinese Communist Party won’t receive a leg up from the Commonwealth’s economic incentive packages,” spokesperson Macaulay Porter said in a statement to the Washington Examiner. “When the potentially damaging effects of the deal were realized, the plant proposal never reached a final discussion stage.”

CATL is not owned by the Chinese government, and Beijing had reportedly tried to dissuade CATL from expanding in the United States because of tensions.

Democratic leaders have criticized Youngkin’s decision as disadvantaging rural Virginians and urged him to change course.

“The governor, in his ambition to run for president, is leaving folks behind,” Democratic Del. Don Scott said Thursday.

Republicans in Washington have increasingly set their sights on China, which many in Congress and in the intelligence community consider to be the U.S.’s No. 1 geopolitical foe. The House of Representatives just voted in a large bipartisan margin to create a select committee to deal with issues relating to competition between China and the U.S.

Democrats, in their Inflation Reduction Act, included language designed to diminish China’s influence in the technology sector. The law’s electric vehicle tax credit only gives the max subsidy to vehicles manufactured in North America and whose battery components are increasingly manufactured and sourced from the U.S. or free trade partners.

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The battery requirements were included at the demand of Sen. Joe Manchin (D-WV), who, similar to Youngkin, said the U.S. should not subsidize electric vehicles if China sees much of the financial benefits.

© 2023 Washington Examiner

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