CATL batteries are displayed during an expo in Xiamen, Fujian province. [Photo provided to China Daily]

Chinese battery leader Contemporary Amperex Technology Co Ltd said on Tuesday that it will license its electric vehicle battery technologies to US automaker Ford Motor for the latter's battery factory in the state of Michigan in the United States.

CATL, the world's largest EV battery maker, said in a reply provided to China Daily that it has accepted Ford's invitation for collaboration in the plant by providing services and knowledge for the construction and operation, without disclosing which generation of battery technologies it will license.

"We are working together to provide the market with the most competitive products. Such a model of cooperation is about complementing and reinforcing each other for industry leaders CATL and Ford," the company said.

The move came just as Ford announced on Monday plans to invest $3.5 billion to build an EV battery plant in Michigan. The plant, which is expected to open in 2026 and employ 2,500, will produce new lithium iron phosphate, or LFP, batteries.

Ford currently uses nickel cobalt manganese batteries, compared with which, LFP batteries have a lower energy density but are cheaper, have a longer shelf life and are less prone to overheating.

Ford Chairman Bill Ford said at the event on Monday that CATL will assist in helping the automaker speed up building the batteries themselves. "Manufacturing these new batteries in the US will help us build more EVs faster and will ultimately make them more affordable for our customers," he said.

Notably, the automaker will own the new facility through a wholly owned subsidiary instead of operating it as a joint venture with CATL, following new US tax credits for EVs that took effect under the Inflation Reduction Act passed last year.

According to the act, to be eligible for half the amount of the credit, that is $3,750, at least 50 percent of the value of the components of the EV battery must be manufactured or assembled in the US. In addition, EVs with battery components or materials sourced from "foreign entities of concern", such as China, are excluded.

"This cooperation model kills two birds with one stone. It not only enables Ford to obtain various subsidies promised in the Act but also helps CATL to avoid foreign investment security reviews to reduce some risks," said Lyu Xiang, a researcher on US studies with the Chinese Academy of Social Sciences.

According to a report from market consultancy SNE Research, total global usage of EV batteries hit 517.9 gigawatt-hours last year, soaring 71.8 percent compared with the previous year.

The growth of Chinese battery firms has been showing accelerated momentum in recent years, accounting for six of the top 10 battery makers globally in terms of installation last year. In 2021, their total battery installation made up less than 50 percent of the global market.

CATL ranked first again with a global market share of 37 percent. Chinese EV maker BYD reached the same battery installation level as South Korea's LG Energy Solution with a market share of 13.6 percent. China's CALB, Gotion, Sunwoda and Farasis were also among the top 10.

"Recent moves show CATL's ambitious plans and accelerated steps for its capacity expansion in overseas markets to get closer to major car manufacturers to reduce costs in logistics amid economic uncertainties," said Wang Jing, a research supervisor for high-end manufacturing at Shanghai Chaos Investment Group Co Ltd.

"With an anticipated boom in NEV sales globally in the coming years, Chinese mainstream battery manufacturers will no doubt rev up efforts to go global," Wang said.