Ford Motor Co. halts construction of $3.5B EV battery plant in Michigan, emphasizing the need for competitive functionality.
The company’s decision comes amidst ongoing contract negotiations with the United Auto Workers (UAW) union, which aims to secure top wages for workers at battery factories.
The UAW initiated a strike against Ford, General Motors, and Stellantis on September 15. Initially, the workers targeted one assembly plant from each automaker, but last week expanded the strike to include parts warehouses. However, Ford was exempted from this expansion due to positive progress in negotiations.
In February, Ford announced plans for the plant’s construction in Marshall, Michigan, with approximately 2,500 employees dedicated to producing cost-effective batteries for a range of vehicles. Marshall is strategically located near major interstate highways, about 100 miles west of Detroit.
Nevertheless, Ford spokesman TR Reid confirmed on Monday that construction had been halted and expenditures limited.
“There are several factors to consider,” he stated in an email. “We have not made a definitive decision regarding the planned investment.”
Additionally, local opposition to the factory’s location and concerns over a Chinese company’s involvement in the subsidiary running the plant have been voiced.
The UAW has not yet provided a comment on the matter.
The factory was slated to initiate battery production in 2026, with a capacity to supply 400,000 vehicles annually. Ford intended to manufacture batteries utilizing lithium-iron-phosphate (LFP) chemistry, an economical alternative to the nickel-cobalt-manganese chemistry commonly employed in EV batteries. This would offer consumers a choice between lower-cost batteries with reduced range and enhanced affordability, or higher-cost options with increased range and power.
The subsidiary, owned by Ford, would manage the factory and its employees. Contemporary Amperex Technology Co. Ltd. (CATL), a Chinese firm renowned for its lithium-iron-phosphate expertise, would supply technology, equipment, and workers.
Republican State Rep. Sarah Lightner, representing Marshall, expressed surprise at Ford’s unexpected decision.
“We are currently gathering information, as there are multiple factors to consider,” Lightner commented.
Lightner added that although the state had allocated nearly $1.7 billion in incentives for the project, not all of the funds had been disbursed, and there are provisions for recovery.
“The strikes likely played a role in this,” she remarked.
Analyst Sam Abuelsamid from Guidehouse Insights suggested that Ford’s decision may be connected to the strike, but is more likely fueled by resistance from conservative rural residents of southern Michigan.
“They are opposed to the factory, the traffic it would bring, and any association with a Chinese company,” Abuelsamid explained.
Abuelsamid further expressed surprise that Ford did not choose a site closer to Detroit, which he believes would be less opposed to a battery plant utilizing Chinese intellectual property.
The announcement of the plant coincided with tense U.S.-China relations and the Biden administration’s promotion of tax credits for businesses establishing a domestic EV battery supply chain. To qualify for the full $7,500 U.S. tax credit per vehicle, EV batteries must not contain any metals or components sourced from China.
Ford’s agreement structure allows it to benefit from U.S. factory tax credits under the Inflation Reduction Act.
Earlier this year, Virginia withdrew from the competition for the same Ford plant after Republican Governor Glenn Youngkin characterized the project as a potential national security threat due to alleged ties to the Chinese Communist Party. At the time, Virginia had not presented an incentive package to Ford.
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