Dueling ogregores: Ford, GM, and Chinese battery technology

Ford and GM are arguing about the conditions of a $7,500 EV tax credit. It’s an argument between ogregores. The positions reflect corporate decisions rather than the opinions of the CEOs. Changing office holders wouldn’t change the outcome.

According to reporting in the WSJ, the companies are at odds about how a $7,500 tax credit for consumers who purchase new electric vehicles should be applied: “Starting next year, buyers can’t use the credit on cars that contain battery components from any source that the U.S. deems a ‘foreign entity of concern,’ a vague term meant to reduce American reliance on Chinese batteries and materials.”

Ford plans to license Chinese battery technology for a plan in Michigan and is lobbying for flexible interpretation of the “foreign entity” rule. GM is pushing for a strict interpretation, presumably because it isn’t planning to invest in Chinese battery firms and Ford could gain a cost advantage in EVs if it can use Chinese tech.

Ford, according to the reporting, hoped to get ahead by licensing the Chinese technology. GM, like some other manufacturers, opted not to invest in EV supply chains until the government clarifies what Chinese tech would be allowed under the final tax credit rules. (There’s complicated politics around creating jobs in Michigan and not sending US tax dollars to China. GM has invested in a company which will mine lithium in Nevada, replacing a Chinese company as the largest shareholder.)

GM is advancing two arguments. The more plausible is that a tax credit on Ford EVs using this technology would put GM at a competitive disadvantage. It also argues that Ford's licensing plans could lead to Chinese domination of the U.S. car manufacturing industry; this “greater good” argument is self-serving. Ford’s arguments are also self-serving, notably the cost efficiency of using the technology. Claims about the benefits of knowledge transfer and job creation are little better.

There is no indication in the reporting that their differing positions are the result of strong opinions by either CEO, their C-suites, or boards. Strategic decisions like these typically weigh various factors like existing investments, in-house skills, market trends, competitive landscape, and financial implications. The preferences of key staff would certainly play into an analysis but is unlikely, especially in complex strategic decisions like this, to be decisive. Manuel DeLanda’s substitution rule applies: “a large organization may be said to be the relevant actor in the explanation of an interorganizational process if a substitution of the people occupying specific roles in its authority structure leaves the organizational policies and its daily routines intact” (DeLanda, A New Philosophy of Society, 2006). One can therefore fairly say that this is a collective decision; the companies are acting like ogregores. 

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