In addition to giving tax breaks to consumers who buy or lease electric cars and trucks, the Inflation Reduction Act provides tax credits for automakers and suppliers that build battery plants in the United States. If the credits survive, they could offset about a quarter of the cost of the plant in Marshall, Ford executives said.
The House version of the Republican bill would eliminate credits for plants that were built with materials or technology from China, Iran, North Korea or Russia. The restriction would be particularly damaging to Ford’s Marshall plant. Several other U.S. battery plants use technology from suppliers based in South Korea or Japan, which are not targeted by the bill.
Ford’s plant is scheduled to start production next year and is supposed to create 1,700 jobs. It will churn out a type of battery that uses lithium, iron and phosphate. The technology underlying the batteries was originally developed in the United States, but was commercialized and is now largely dominated by Chinese companies like CATL, the world’s largest battery maker.
LFP batteries costs less than the batteries most commonly found in U.S. electric vehicles because they do not use two relatively expensive materials: nickel and cobalt. Nickel and cobalt batteries can store more energy and, thus, travel longer distances on a full charge. But some automakers like Ford believe that iron-based batteries can provide sufficient driving range at a much lower cost.
Ms. Drake said the loss of the tax credits would have a “very material” effect on the economics of the Marshall plant. She added that Ford probably would have built the plant outside the United States if it had not been promised the credits by the Biden-era law.