Beyond Isolation: The Case of CATL and US-China Tech Cooperation
With Chinese EVs being shut out of American markets and Washington’s ongoing tariff negotiations designed to further isolate China economically, it seems as if bilateral relations between the United States and China, especially in their interactions in emerging technology, are imminently at risk. While tensions continue to rise, China’s “whole nation” approach to technology initiatives has simultaneously enabled China to lead in 37 of the 44 crucial fields of technology as monitored by the Australian Strategic Policy Institute.
The US is not only concerned that China’s tech lead may undercut American domestic manufacturing, but also nervous about rising global reliance on Chinese supply chains. Thus, in its attempt to bolster US competitiveness, U.S. leadership has adopted strategic policies to shut China out of key tech sectors in the US and its close trade partners. However, given the interconnectedness in the global economy, complete decoupling from China seems implausible at best. Instead, the recent partnership between Chinese battery company Contemporary Amperex Technology Co., Limited (CATL) and the Ford Motor Company highlights a key instance of bilateral tech cooperation. In an aberration to the political landscape, the initiative suggests that leveraging existing Chinese expertise rather than isolating China may be a more productive approach in allowing the US to strengthen its domestic battery production.
According to Jim Farley, Ford’s CEO, China “leads the US by 10 years in EV batteries”, and if the US wants a chance at being competitive, it must use China’s technical expertise. Despite roadblocks and political pressure along the way, Ford continues to press on with the project. Ford originally planned to build the battery plant with CATL technology in Virginia, but Governor Glenn Youngkin shut the plan down due to concerns that Ford would be merely serving as a “front” for China. Now, amidst the uncertainty of Inflation Reduction Act (IRA) provisions and the new Big Beautiful Bill that endangers tax credits for batteries made under Chinese licensing, there are further challenges for Ford and CATL. However, Ford has now almost completed its relocated factory in Michigan that aims to create 1,600 jobs under 100% Ford ownership and has stated that they will not cease construction. Its executives argue that “somebody will have to take the lead” for the US to compete globally in EV production, presumably inspiring the persistence.
CATL is the global leader in battery production, enjoying a dominant lead in the global EV battery market, and more than doubling the runner up BYD’s market share in 2023. Leveraging CATL technology, the Ford factory will produce lithium iron phosphate (LFP) batteries, a technology that Ford wants to incorporate in its next generation EVs that would otherwise have been infeasible to domestically manufacture in the near term. Further, Ford will retain control over its supply chain, workforce, and equipment, leading the company leaders to believe that proceeding despite ongoing policy challenges is the right choice for them and the country as a whole.
Ford claims it was in touch with the White House almost daily during discussions over the new Big Beautiful Bill, arguing it was unfair to change policies after the initial expenditures were already sunk into the project. Though Ford says they would have continued no matter the outcome, the final version of the bill left just enough leeway for the plant to continue to qualify for tax credits, paving an easier path for Ford and other American companies to pursue such ventures. While the bill imposes restrictions that will make qualifications for credits more difficult, the compromise shows that even Republican lawmakers see the danger in completely gutting these incentives, especially for factories that operate in predominantly red states. Ford’s key focus is to catch up with companies like BYD which produce EVs at a fraction of the cost to American companies, and this factory is a key step in that process. Tesla presumably holds a similar vision for its EV future, with its new LFP facility in Nevada also using equipment and battery design from CATL. With credited cooperation still viable under current policy, a competitive American technology future bolstered by Chinese expertise remains possible.
If similar tech connections can be established with China-based companies, the potential for more equitable and productive competition is highly likely. In fact, there are already instances of U.S.-China cooperation in this sector. US company Freyr has recently bought China’s Trina solar factory in Texas, and EVE Energy, a leading battery manufacturer in China, is investing and contributing its battery cell design to a joint venture battery cell factory in Mississippi.
Undoubtedly, Washington’s policy shifts have made such bilateral tech interaction uncertain. However, if the US continues to sit back and refuses to use Chinese technology even in discreet manners, it will fall further in the emerging technology race. The Ford-CATL partnership as well as other joint ventures highlight the fact that despite deepening tensions between the two countries, US commercial actors continue to show willingness to partner with China on tech projects.
Their choice is not just tactical but strategic—to preserve America’s global edge in the auto industry, it’s in the US’ best interest to expand its battery production with involvement from leading Chinese companies. In the current EV market, China makes up almost 60% of global EV sales, making it unlikely that the US can feasibly catch up on their own. EVs are a continually expanding market that the US will have to gain a foothold in; thus, it remains crucial to find a way to pursue relative parity through alternative means.
Ultimately, US competitiveness in emerging technology can’t be achieved through isolation alone—it requires both domestic investment and calculated cooperation with China. The question is no longer if the US should incorporate certain elements of Chinese technology in their own industries, it is a matter of how. This means continuing to provide tax credits for even Chinese-backed tech projects and carefully considering if it makes sense to shut China out in certain fields. The US must abandon its isolationist impulse and revolutionize its approach in order to cement it position as a leader in cutting-edge technologies.
