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Liam Denning

Musk Knows It’s China’s Clean-Tech World for Now. So Does Biden.

Tesla and Ford are looking for ways to match the IRA's promise with today's realities. They risk daring Congress to impose tighter restrictions on Chinese involvement. 

China’s CATL is the largest battery maker in the world.

China’s CATL is the largest battery maker in the world.

Photographer: Bloomberg/Bloomberg

The Inflation Reduction Act’s essential problem is that it aims to foster a US clean tech boom without using clean tech from the world’s number one supplier of clean tech. The Venn diagram of “clean tech suppliers” and “China” is, like time, a flat circle. News that Tesla Inc. may follow Ford Motor Co. in partnering with a large Chinese company to build a domestic electric vehicle battery plant is the latest reminder of this dilemma and the contortions by politicians and companies alike to get around it.

Contemporary Amperex Technology Co., or CATL, is the largest battery maker in the world. In addition, it dominates the supply of lithium-iron-phosphate, or LFP, batteries. These lack the range of more traditional nickel-based chemistries but are safer and, crucially, cheaper. Tesla’s expansion in China and its cheapest Model 3 variant in the US owe much to using CATL’s LFP cells in its batteries. Similarly, Ford wants to use those batteries to boost production of its burgeoning EV line, so it’s building a factory in conjunction with CATL in Michigan.