A series of national security experts and former U.S. officials are sounding the alarm that Chinese government-backed companies could exploit a workaround to benefit from taxpayer-funded electric vehicle (EV) subsidies in the Inflation Reduction Act (IRA).
The stark warning comes a week after Ford, the second-largest automaker in the U.S., announced it would partner with the massive Chinese tech company Contemporary Amperex Technology (CATL) to build a new EV battery plant in Michigan. As a result of the agreement, CATL could potentially benefit from taxpayer subsidies earmarked in the IRA which was intended to strengthen domestic supply chains.
“It’s shocking that Ford is doing this,” former White House National Security Advisor Robert O’Brien said in an interview with Fox News Digital. “We just had a Chinese spy balloon traverse the length and breadth of our country and violate our sovereignty. And Ford is partnering with our leading competitor, our adversary, to work on battery technology and build batteries here in America.”
“On top of that, they’re trying to work out a loophole to get U.S. taxpayers to support and subsidize their dealings with China and to bolster a Chinese company with U.S. tax dollars, the tax credits in the Inflation Reduction Act,” he continued. “It’s a total perversion of the Inflation Reduction Act which was intended to bring manufacturing home with U.S. supply chains and exclude the Chinese.”
Ford CEO Jim Farley announces the company’s partnership with Contemporary Amperex Technology to build an electric vehicle battery plant in Marshall, Michigan, on Feb. 13. (Bill Pugliano/Getty Images)
O’Brien added that, like other Chinese companies, CATL falls under China’s national security law making it “subservient” to the Chinese Communist Party (CCP). CATL’s founder and CEO Robin Zeng also has ties to the CCP’s “United Front” influence campaign.
The former national security advisor predicted the U.S. government would eventually intervene and prevent the Ford plant from being built.
A spokesperson for Sen. Joe Manchin, D-W.Va., who helped author the IRA, said the West Virginia lawmaker had “serious questions” with the partnership. The agreement was similarly questioned by Sen. Marco Rubio, R-Fla., the vice chairman of the Senate Select Committee on Intelligence.
“Senator Manchin has been clear about his grave concerns about vehicle supply chain reliance on China,” Sam Runyon, a spokesperson for Manchin, told Fox News Digital. “Ford has serious questions to answer before Senator Manchin can fully evaluate the business partnership.”
Under the IRA, EVs will be barred from receiving the $7,500 clean vehicle tax credit if they are assembled with a battery containing components sourced from a “foreign entity of concern” or containing minerals sourced from a “foreign entity of concern,” beginning in 2024 and 2025, respectively.
Because China falls into that classification, the bill would disqualify EVs with Chinese-sourced components and minerals from being eligible for the credit. China currently boasts 78% of the world’s cell manufacturing capacity for EV batteries, according to a Brookings Institution analysis released in July.
Sen. Joe Manchin, D-W.Va., claps after President Biden signs the Inflation Reduction Act at the White House on Aug. 16. (Drew Angerer/Getty Images)
“The intent behind the language was to decrease reliance on Chinese EV parts and Chinese rare earth materials and minerals,” said Craig Singleton, a senior China fellow at the nonpartisan Foundation for Defense of Democracies.
“What we often see is, in the absence of very clear regulatory language, companies like Ford will make up their own rules and sort of test and see what’s possible,” he added. “This is just, I think, an attempt at a creative workaround.”
A Ford spokesperson told Fox News Digital that the company will maintain full control of the new battery facility and that the plant will be wholly owned by Ford with no foreign investment.
The spokesperson added that CATL would have “limited involvement” as a contractual service provider and licensor of technology to Ford.
“Ford is helping to strengthen the U.S. supply chain for EVs, a core goal of the Inflation Reduction Act, and the $3.5 billion we’re investing in a new battery plant is a huge example of that,” spokesperson Melissa Miller said in an email. “Instead of only importing batteries made in China and elsewhere like other automakers do, Ford is bringing the technology, 2,500 jobs and production to the United States.”
“The plant will be fully owned and operated by Ford,” she continued. “CATL’s only involvement will be as a licensor of technology to Ford and a service provider on a contractual basis. They will receive no U.S. tax dollars.”