American made electric vehicles cannot do without Chinese batteries

Recently, a report in the Wall Street Journal in the United States has attracted industry attention: even facing high import tariffs, General Motors has decided to purchase batteries from Chinese power battery giant CATL to support the production of its electric vehicle models. This arrangement will continue until its joint venture with South Korean LG New Energy to build a domestic lithium iron phosphate battery factory in the United States is put into operation. Coincidentally, BMW Group also plans to use imported power batteries from China in the US market to match its locally produced electric vehicle models.

At the same time, Ford Motor Company announced a strategic plan called the "Electric Vehicle Model T" aimed at launching multiple economical electric models. The core support of this plan is Ford's newly built battery factory in Michigan, which will produce based on the lithium iron phosphate battery process authorized by CATL. On the other hand, Tesla also announced that its first lithium iron phosphate battery factory in Nevada is about to start production, with production equipment supplied by CATL and the factory fully operated by Tesla.

High tariffs hinder China's battery imports
Recently, former US President Trump's "Big and Beautiful" tax reform bill has made significant adjustments to clean energy tax incentives, not only terminating subsidies for some projects in advance, but also strengthening restrictions on so-called "Foreign Entities of Concern" (FEOC), putting pressure on many supply chain companies.
Of particular note is that the 17 year old US federal electric vehicle tax credit policy will officially end on September 30th of this year. This $7500 subsidy was once an important driving force for the growth of the US electric vehicle market. It not only lowered the threshold for consumers to purchase cars, but also incentivized car companies to shift their industrial chain to the United States.
Against the backdrop of this policy change, despite facing high tariffs with a comprehensive tax rate of up to 80%, General Motors has decided to import CATL's lithium iron phosphate batteries from China for use in the new generation Chevrolet Bolt model. The company referred to this arrangement as a 'transitional measure', with the ultimate goal still being to produce low-cost lithium iron phosphate batteries domestically in the United States.
BMW is also facing a similar situation. The battery factory it collaborated with Far East Power to build in South Carolina has been suspended due to "policy and tax uncertainty". At present, BMW has chosen to import 46 series large cylindrical batteries from Far East Power's factory in China for the assembly of global electric platform models.

Diversified cooperation models to cope with policy restrictions
To avoid political risks and compliance challenges, American car companies are trying various ways to cooperate with Chinese battery companies.
Ford adopts a "technology licensing" model, with CATL providing battery technology and production support, while Ford is responsible for factory ownership and operation. Although this arrangement is still controversial in the United States, Ford has made it clear that it will not suspend the construction of the battery factory.
Tesla chooses to directly purchase equipment from CATL and independently operate battery production. Its Nevada factory is expected to have an initial production capacity of 10 GWh, which will mainly be used for energy storage products and some vehicle models.
These cooperation models indicate that while ensuring compliance with local policy requirements, American car companies are still actively leveraging the technological advantages and supply chain capabilities of Chinese companies to accelerate their electrification transformation.

Pursuing 'affordable electric' is the key driving force
The core reason why American car companies still choose to cooperate with Chinese battery companies in the context of high tariffs is the dual pressure of market and cost.
With the withdrawal of federal tax credit policies, the gap between the selling price of electric vehicles and gasoline vehicles has once again widened. Data shows that in July of this year, the average selling price of electric vehicles in the United States was still about $7000 higher than that of gasoline vehicles. Therefore, launching more competitively priced economical electric models has become a strategic focus for many car companies.
Lithium iron phosphate batteries have become an important technological path for achieving "affordable electrification" due to their low cost, high safety, and long cycle life. Its production cost is about 30% lower than that of ternary lithium batteries, and it does not rely on expensive metals such as nickel and cobalt, which is more in line with the positioning needs of Volkswagen models.
The new generation Chevrolet Bolt planned by General Motors is priced at approximately $30000 and aims to become one of the most affordable electric vehicle models in the market. Ford also announced the launch of multiple economical electric models based on the Universal EV platform, including a mid size electric pickup truck with an expected starting price of $30000.

Lithium iron phosphate is changing industry rules
Against the global backdrop of subsidy reduction, lithium iron phosphate batteries are rapidly becoming the mainstream choice in the fields of electric vehicles and energy storage due to their cost-effectiveness advantages. This transformation is largely due to the leading position of Chinese enterprises in technology research and development, large-scale production, and industrial chain integration.
In recent years, Chinese battery companies have achieved significant breakthroughs in energy density, fast charging performance, and low-temperature performance of lithium iron phosphate batteries. For example, the Shenxing PLUS battery launched by CATL can achieve a range of 1000 kilometers and a 4C overcharge capability; BYD's blade battery improves system energy density through structural innovation. In addition, the commercialization of new materials such as lithium manganese iron phosphate has further expanded the technological ceiling.
It is worth noting that China included the "preparation technology of lithium iron phosphate for batteries" in the "Catalogue of Technologies Prohibited from Export and Restricted by China" in July this year, and implemented export controls on high-end specifications of material technology. Industry experts pointed out that this move aims to protect core intellectual property rights, maintain the advantageous position of Chinese enterprises in international competition, and does not affect normal business cooperation and technological exchanges.

Conclusion
From being seen as a "low-end choice" to becoming a "rule changer" in the global electrification wave, the rise of lithium iron phosphate batteries reflects the technological strength and market influence of China's power battery industry. Faced with the urgent demand for affordable electric vehicles, mainstream American car companies still choose to rely on Chinese battery technology to promote localized production, reflecting the reality of deep integration of global supply chains.
In the international environment of policy fluctuations and continuous trade barriers, Chinese battery companies continue to participate in the reconstruction of the global new energy industry pattern through various forms such as technology authorization, equipment output, and overseas factory construction, which once again proves that in the context of industrial globalization, "decoupling and chain disconnection" is neither realistic nor achievable.
Special statement: The content is sourced from China Automotive News and includes AI assisted creation. The content is for reference only and is intended to convey more information rather than profit. Copyright belongs to the original author. If there is any infringement, please contact us for deletion.