Dane Hardware, a Ford design and release engineer, tests the state of charge (SOC) of the battery chamber and cell temperatures on a running battery at Ford’s Battery Benchmarking and Test Laboratory in Allen Park, Michigan.

Ford was expected to announce Monday it planned to build a US$3.5bn lithium iron phosphate battery plant in Michigan, sources told the Reuters news agency.

Ford was expected to own and operate the plant with China’s Contemporary Amperex Technology (CATL) as a technology partner to help develop the batteries, Reuters’ sources said. Ford declined to confirm the plans to the news agency but said on its website it would “update on its plan to rapidly scale EVs and make them more accessible to customers”.

The plant was expected to be located in the Marshall, Michigan area, and eventually employ at least 2,500 workers, Reuters said. The state had marketed a 1,900 acre Marshall “megasite” about 100 miles west of Detroit.

CATL, which also declined to comment to Reuters, signed technology licensing agreements with Hyundai Mobis in 2021 and Arun Plus in 2022 as a way of generating stable cash without taking big risks and making investments.

The news agency noted, in August, Congress had passed the $430bn Inflation Reduction Act (IRA) legislation to restructure EV tax credits and eventually bar credits if any EV battery components were manufactured or assembled by a “foreign entity of concern” or if batteries contain critical minerals extracted, processed, or recycled by a foreign entity of concern.

The rules were aimed at weaning the US off the Chinese battery supply chain, the report said. By Ford owning the plant outright, it might help ensure the batteries produced can qualify for tax credits.

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Reuters noted Virginia governor Glenn Youngkin had faced criticism for withdrawing from a competition to attract the planned Ford battery plant over its connection to CATL.

A spokesperson for Youngkin said last month that “while Ford is an iconic American company, it became clear that this proposal would serve as a front for the Chinese Communist party.”

The Michigan Economic Development Corporation declined to comment to Reuters.

In January, Michigan governor Gretchen Whitmer told the Detroit News Youngkin’s decision was a “political determination.”

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