Tomorrow Investor

EV Production, Chinese Involvement Fuel Ford-GM Rivalry in the 21st Century

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One would think that the longstanding rivalry between automaking titans Ford Motor and General Motors (GM) may have been quelled over the decades, but recent issues involving electric vehicle (EV) production and the entry of Chinese EV makers into the United States’ automotive scene through strategic partnerships have stoked the fires of hate between the two firms.

Back in June, GM chief executive Mary Barra warned Congress that Ford’s plans to use Chinese technologies at its $3.5 billion battery production plant in Michigan would result in foreign players dominating the domestic vehicle production sector. Barra’s warning came just as Ford CEO Jim Farley was touting the plant’s merits to a visiting party of legislators.

Currently, both companies are warring over the stipulations of an existing $7,500 tax credit for Americans buying new EVs. Come 2024, buyers will no longer be able to use those credits on EVs that have battery components from manufacturers located in foreign nations of concern. This is in keeping with the Biden administration’s goal of reducing, if not completely eradicating, the country’s reliance on batteries and components imported from China.

As Ford currently plans to license such foreign technologies to manufacture cheaper iron batteries at its Michigan facility, the company wants a more flexible interpretation of the term foreign entity in the said regulation. Otherwise, the batteries it plans to produced will not be covered under the tax-credit scheme. However, as of Monday, September 25th, Ford has paused construction of its battery plant.

Meanwhile, GM has no plans to deal with or accept investments from Chinese battery companies. Indeed, company executives and allies have called upon Congress for a stricter interpretation of the entity of concern stipulation, thus blocking the participation of Chinese investors in its rival’s operations. As a company spokesperson puts it, their lobbying is not about the rivalry between two American firms, but for the proponents of the Inflation Reduction Act (IRA) to keep the country’s best interests in mind when it comes to domestic manufacturing.

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