Ford saved money with China, and Washington just changed the equation
Ford used CATL and Geely to cut costs. Washington now says the China dependence has gone too far, putting three strategic projects under pressure.
Ford wanted to make cars cheaper. Now those savings carry a political price. Back in July, the company described its alliance with Geely as a way to cut vehicle costs and make better use of its plant in Valencia, Spain. But on September 8, that strategy suddenly became a problem: U.S. Transportation Secretary Sean Duffy urged Ford to reduce its dependence on Chinese technology and manufacturing.
The list of complaints was substantial. In a letter to Ford CEO Jim Farley, the department pointed to CATL technology licensed for LFP battery production in Michigan, the joint project with Geely in Spain and the continued production of some Lincoln vehicles in China until 2030. Reuters reports that Washington has also raised questions about Ford's contacts with BYD.
This is where the story gets especially interesting. Until recently, working with Chinese companies looked to Ford mainly like a way to gain access to cheaper technology and cut expenses. When developing the battery plant in Michigan, the company explicitly linked LFP chemistry to the goal of making electric vehicles more affordable. Ford owns the facility, while CATL provides technology under license.
Ford rejected the administration's criticism. The company stresses that it owns the U.S. plant, controls its operations and hires the workforce itself. In other words, Ford insists this is not a Chinese joint venture but a limited technology arrangement. The project is expected to support about 1,700 jobs in the United States.
The situation with Geely is entirely different. Ford and the Chinese group have agreed to create a full joint venture at the Valencia plant: Ford will hold 66%, while Geely will own 34%. Subject to the necessary approvals, the structure is due to start operating in the first half of 2027, with production of new models scheduled for 2028. Ford's explanation is bluntly pragmatic: competition in Europe is intensifying, and the cost of every vehicle produced has to come down.
The BYD story is far less settled. There is no final agreement. In January, reports only said the companies were discussing possible battery supplies for future Ford hybrids, with Chinese batteries potentially being used at plants outside the United States. So it is still too early to call BYD a full Ford partner.
Washington considers even Lincoln's already announced shift too slow. Ford intends to begin moving production of some models from China to the United States only in 2030. The Lincoln Nautilus for the U.S. market is currently built in China, leaving several years before the planned change.
For now, the Transportation Department's letter bans nothing and cancels neither the CATL arrangement nor the Spanish project with Geely. But the rules have already changed for Ford. Savings on batteries, technology and manufacturing now have to be weighed not only against tariffs and production costs, but also against the risk of direct political pressure in the United States.
What happens next? Three tracks are worth watching. Ford must decide whether the current CATL licensing model survives, whether talks with BYD continue and whether the Geely joint venture clears all required approvals before its planned launch in 2027. Those decisions will show what matters more to Ford: Chinese cost savings or Washington's demands.