Ford Motor Co. on Monday announced plans to invest $3.5 billion to build an electric vehicle (EV) battery plant in Michigan, betting that making the batteries in the U.S. will help it and Chinese partner CATL attract U.S. customers to embrace a lower-cost technology pioneered in China.

Ford's plan to build the battery plant near Marshall, Michigan, hinges on a judgment that lower cost and faster recharging will attract many customers, including commercial fleet buyers, to accept the limitations of lithium-iron-phosphate, or LFP batteries.

Ford is also counting on its decision to manufacture LFP batteries in the U.S. at the wholly-owned plant to take the political risk out of relying on a Chinese technology partner.

"Manufacturing in America will bring us closer to battery independence," Ford Chairman Bill Ford said during an event in Romulus, Michigan, to announce the investment.

Building LFP batteries in Michigan also gives Ford a shot at significant U.S. battery manufacturing subsidies that could help it hit a goal of 8-percent profit margins on its EV operations by 2026.

The BlueOval Battery Park Michigan project is a "substantial step in the path to affordability and the path to 8-percent" margins, Ford Vice President Lisa Drake said during a media call ahead of the event.

CATL would license the technology to Ford to produce lithium iron phosphate batteries in Michigan, and would provide the U.S. automaker with technical assistance, Ford said.

Ford last year agreed to form a joint venture with South Korean battery maker SK Innovation to build EV battery factories in Tennessee and Kentucky.

The automaker has a goal of building 600,000 EVs a year by the end of 2023.

(Source: Reuters with edits; Cover via CFP)