Ford reduces scale of Michigan battery plant, resumes construction

Ford reduces scale of Michigan battery plant, resumes construction

Ford to Scale Back Investment and Jobs at Michigan EV Battery Plant

Ford announced on Tuesday that it will be scaling back its investment, capacity, and the number of jobs planned for its electric vehicle (EV) battery plant in Michigan. The decision comes after the plant faced criticism from U.S. lawmakers due to its partnership with Chinese battery maker CATL.

The automaker stated that it will resume construction of the factory near Marshall, Michigan, after a two-month pause. Ford’s new plan involves producing low-cost lithium-iron batteries by 2026, utilizing technology licensed from CATL. The company will retain ownership of the factory and has agreed to allow the United Auto Workers the opportunity to organize the plant’s workers without a vote.

Ford’s association with CATL has sparked concerns among U.S. lawmakers who oppose Chinese entities benefiting from the country’s EV subsidies. In an effort to address these concerns, Ford is seeking approval from the U.S. Treasury Department for the use of lithium-iron, or LFP, batteries manufactured at the Michigan factory to qualify for Inflation Reduction Act EV subsidies. The automaker is already utilizing imported LFP batteries in its Mustang Mach-E electric SUV.

Ford spokesperson Mark Truby expressed confidence in the eligibility of LFP batteries for IRA benefits during a teleconference with reporters. However, the company has decided to scale back its original plans for the Michigan battery plant. Instead of investing $3.5 billion to produce 35 gigawatt hours of batteries annually and employ approximately 2,500 people, Ford will now aim for a capacity of 20 gigawatt hours and reduce hiring to 1,700 jobs.

Truby did not provide an exact figure for the reduced capital investment but indicated that it would be proportionate to the 40% decrease in capacity. This suggests a revised price tag of around $2 billion.

In October, Ford announced a $12 billion reduction in future electric vehicle investments compared to previous plans. The company has also postponed the construction of battery factories in Kentucky and Turkey.

Overall, Ford’s decision to scale back its Michigan EV battery plant is aimed at addressing concerns raised by U.S. lawmakers while ensuring the company’s continued progress in the electric vehicle market.

(Reporting By Joe White; Editing by Anil D’Silva)