(Yicai Global) Feb. 14 -- Contemporary Amperex Technology, the world’s leading supplier of batteries for electric vehicles, has agreed to provide technology and support to Ford Motor’s planned USD3.5 billion lithium iron phosphate battery plant in Michigan.

CATL will provide LFP battery cell technology and services to the plant, Michigan-based Ford said in a statement yesterday. Called BlueOval Battery Park Michigan, it will have an annual capacity of about 35 gigawatt-hours and employ 2,500 people when production begins in 2026, Ford added.

The deal adds to Ford's existing battery capacity and available battery technology made possible through a series of key collaborations, including those with SK On and LG Energy Solution, the automaker said, adding that it is the first car producer to commit to building both nickel cobalt manganese and LFP batteries in the United States.

Compared with nickel cobalt manganese batteries, LFP power packs are more durable and cost-effective. “They will help power a variety of Ford's next-generation of EV passenger vehicles and pickups,” the company pointed out.

The new plant will be able to take full advantage of the tax benefits of the US federal government's Inflation Reduction Act without direct financial investment from CATL, according to analysts

The IRA states that US buyers can claim between USD7,500 and USD40,000 federal tax incentives if half of the components in the batteries used in the EV they purchase this year are made or assembled in North America. That will increase by 10 percentage points a year to 100 percent in 2028.

Editor: Futura Costaglione