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Duffy tells Ford to unwind a Valencia venture that already clears two EU draft conditions
The US transportation secretary's 8 September letter objects to Ford's 66-34 joint venture with Geely in Spain. European lawmakers are drafting a law that would make a capped Chinese stake the price of entry.
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What happened
- Sean Duffy wrote to Ford chief executive Jim Farley on 8 September citing "profound concern" over a CATL battery licence in Michigan, a delayed exit of Lincoln production from China, and the Geely venture in Spain.
- Ford and Geely agreed in July to build four models together at Ford's Valencia plant from 2028, with Ford holding 66% of the venture and Geely 34%.
- MEPs drafting the Industrial Accelerator Act want investors from countries holding 40% of a global market to enter through a joint venture with an EU entity, cap their stake at 49% and transfer technology to Europeans.
- The rapporteurs Christophe Grudler, Pierre Jouvet and Anna Cavazzini would add 60% EU workers, 1% of revenue into European research and 30% local inputs, and make the rules bite at EUR 50M instead of EUR 100M.
- Ford called the transportation secretary's letter "a wrongheaded attempt to capture headlines".
Compiled by The Product DeskSomething wrong?How this is made
Why it matters
- cost Halving the trigger to EUR 50M pulls in ventures the Commission's threshold would have left alone, and the local-content and research percentages are paid out of the joint venture's own accounts.
- exposure Every US carmaker holding a Chinese battery licence now knows a letter to the chief executive is an available instrument, and that it carries force with only a signature behind it.
- constraint Valencia's 2028 start date means sourcing and tooling choices harden while the European law is still in draft and the DOT letter still rests on persuasion.
- precedent If Brussels codifies technology transfer as the entry price while Washington keeps demanding exits, European plants become the place Chinese battery knowledge is required to land and US plants the place it is barred from.
The person who has to act on this is whoever is costing the 2028 bill of materials at Valencia. Sean Duffy asked Ford to cut ties with CATL and Geely, and he did not allege that the company had broken any law [12][5].
TNW reported that the European Parliament is tightening a law that would require exactly the Valencia arrangement [13]. Read closely, the duty in the draft falls on the incoming investor: a Chinese firm entering a strategic sector has to come through a joint venture with an EU entity, stay under the cap and hand technology to Europeans [7]. Ford took a Chinese partner by choice. If the Valencia venture ends, European law is satisfied, and the technology transfer Brussels wants attached to it goes too.
Ford and Geely already clear the joint venture and the stake conditions [8]. Geely's 34% sits 15 points below the proposed 49% ceiling [15]. Ford could sell Geely another 15% of Valencia, remain inside the EU cap, and move directly away from what the letter asked for.
"When a company intentionally chooses to deepen operational dependencies on strategic competitors, it fails to act as the reliable partner the American public and this DOT require," the letter said [3]. InsideEVs argued that America's China policy looks less settled the closer you read it [14].
Brussels wants a price attached because the last round of partnerships came without one. Transport and Environment found no technology transfer requirements in Chinese-European battery tie-ups that drew EUR 900M of state aid for plants in Hungary and Poland and about EUR 300M for a CATL venture with Stellantis in Spain, about EUR 1.2bn between them [11][16].
Both capitals are aimed at the same fact, that Chinese firms now lead on batteries [18]. For anyone with a Chinese partner in a strategic sector, the decision turns on what the partner supplies, capacity you could buy elsewhere or knowledge you cannot build in the time you have, and on what is pointed at you, an instrument with a threshold and a date or one that rests on a signature. If it is capacity and a letter, you can wait to see whether the letter becomes a federal contracting condition. If it is knowledge and a rule, the ownership split and the sourcing percentages belong in the plan now. Valencia builds from 2028 [6].
What to watch
- Whether the Industrial Accelerator Act keeps the EUR 50M trigger and the 30% local input rule as it moves through the Parliament.
- Whether DOT attaches conditions to federal contracts or grants for Ford instead of sending another letter.
- Whether Ford changes the Valencia ownership split or the four-model plan before tooling decisions harden.