To avoid Sino-American political problems, Ford Motor is thinking about partnering with a Chinese company to build a battery plant in the United States.

For tax benefits, Ford and Contemporary Amperex Technology Co. of China may construct the plant in Michigan or Virginia.

For Ford’s electric vehicles, the factory will supply lithium iron phosphate batteries.

The Chinese battery manufacturer would run the factory and own the technology that goes into the cells, while Ford would own 100% of the plant.

The facility would be eligible for production tax credits under the U.S. Inflation Reduction Act as a result of this.

For electric vehicles to be eligible for the tax credits, President Biden signed legislation imposing new sourcing rules on battery components and critical minerals that go into effect January 1.

To qualify for the credit, electric vehicles and their batteries must be manufactured in North America in accordance with the Inflation Reduction Act.

According to people familiar with the situation, tensions with Beijing’s top geopolitical rival have discouraged CATL from investing in the United States.

The battery creator was placing plans to lay out another office in North America after House Speaker Nancy Pelosi’s excursion to Taiwan further stressed relations between the nations.