Duffy vs. Ford: A Washington Showdown Over Chinese Tech

A sharp public confrontation has erupted in Washington over the boundaries of U.S. industrial policy, with Transportation Secretary Sean Duffy warning Ford Motor Co. about its technology agreements with Chinese entities. The White House, however, has swiftly pushed back, creating a rare public split within the administration over how to handle foreign supply chains in the domestic automotive sector.

The dispute centers on the federal government’s role in overseeing supply chain independence and the permissible use of foreign technology in building America’s electric vehicle infrastructure. In a letter made public Tuesday, Duffy cautioned Ford about its commercial relationships with state-backed Chinese enterprises, stating that these foreign technological entanglements pose risks to both national security and the integrity of domestic industry.

Ford CEO Jim Farley did not mince words in his response, calling the Transportation Secretary’s assertions “basic misunderstandings” and “mistruths.” Farley told The Wall Street Journal that the issues could have been resolved through direct communication between the agency and the automaker, rather than through a public letter. “We’re not enabling the Chinese to come here,” Farley said. “Actually, you could argue the opposite is the case.”

At the heart of the dispute is Ford’s planned battery plant in Marshall, Michigan, a $3.5 billion project named BlueOval Battery Park Michigan. The facility, originally announced in February 2023, was designed to manufacture low-cost Lithium Iron Phosphate (LFP) batteries. Under the arrangement, Ford owns and operates the plant as a wholly owned subsidiary, having structured the deal as a limited technology-licensing and technical service agreement.

The Marshall project relies on licensed technology from Contemporary Amperex Technology Co. Ltd., or CATL, the Fujian-based battery manufacturer that is the world’s largest producer of electric vehicle batteries. Ford structured the deal to avoid creating a joint venture or granting any equity to a foreign partner, instead paying CATL to license its intellectual property and assist with cell installation while keeping 100 percent of the manufacturing assets in American hands.

Duffy also claimed that Ford had proposed a structural framework that would facilitate Chinese automakers establishing joint ventures on American soil—an allegation Farley explicitly rejected. “N-O, period,” Farley said. “That’s flatly wrong. Ford does not propose any framework described in the letter. We are America’s car company.”

In late 2023, Ford recalibrated the Marshall project’s scale, adjusting planned production capacity to 20 gigawatt-hours and projected employment to roughly 1,700 jobs. The adjustments were made to match market demand and address political scrutiny that had been building around the project.

Despite the Transportation Department’s warning, the White House has offered a direct defense of the automaker’s domestic record. In a statement posted on X via its Rapid Response 47 account, the White House praised Ford, describing it as “a GREAT American company” that has “done a tremendous job on increasing investments domestically and shoring production back to the U.S.”

The White House defense aligns with earlier statements from Commerce Secretary Howard Lutnick, who pointed to Ford’s domestic factory expansions as evidence of reshoring industrial capacity and creating “thousands and thousands of jobs” within the United States. This supportive stance stands in contrast to the Transportation Secretary’s warning, highlighting the divergent approaches within the administration.

The confrontation takes place against the backdrop of federal regulations governing Foreign Entities of Concern under U.S. trade and tax law. Current federal rules restrict subsidizing electric vehicles containing battery components or critical minerals sourced from companies subject to foreign jurisdiction, particularly China. Automakers seeking to lower production costs have increasingly turned to technology licensing to manufacture LFP battery chemistry, which is dominated by Chinese suppliers but offers lower production costs and greater durability than traditional nickel-manganese-cobalt batteries.

Farley noted that while he has repeatedly identified Chinese automakers as the primary long-term threat to the U.S. automotive industry, limited collaboration on technology remains necessary for domestic firms to stay globally competitive. He expressed surprise that the Transportation Department chose to release its concerns publicly rather than addressing them through existing regulatory channels.

In an open invitation, Farley asked Duffy to conduct an on-site visit of the Marshall facility and Ford’s assembly facilities in Louisville, Kentucky, to review the technological development taking place domestically. Following the public exchange, shares of Ford Motor Co. traded up $0.43, or 3.19 percent, closing at $13.90.