Ford is going to slash back plans for $3.5 billion Michigan battery plant as EV demand disappoints, and labor costs rise. Ford is scaling back plans for a $3.5 billion battery plant in Michigan as EV demand down, labor costs rises and the company moves to cut costs.
Executives of Ford including CEO Jim Farley and Chair Bill Ford initially announced the Michigan battery plant in February. It quickly became a political target due to its connection to Chinese battery manufacturer Contemporary Amperex Technology Co., or CATL.
Ford Michigan battery plant slowing production
The Michigan battery plant is a wholly owned Ford subsidiary, but the U.S. automaker is licensing technology from CATL to produce new lithium iron phosphate, or LFP, batteries for EVs.
Ford said Tuesday it is cutting production capacity by roughly 43% to 20 gigawatt hours per year and reducing expected employment from 2,500 jobs to 1,700 jobs. The company declined to disclose how much less it would invest in the plant. Based on the reduced capacity, it would still be about a $2 billion investment.
EV demand down
Ford cutting production decision adds to a recent retreat from EVs by automakers globally. EV demand is down lower than expected due to higher costs and challenges with supply chains and battery technologies, among other issues.
Reduced EV investment
Reductions at the Marshall, Michigan, plant are part of Ford’s plans announced last month to cut or delay about $12 billion in previously announced EV investments. The company will also postpone construction of another electric vehicle battery plant in Kentucky.
Ford Motor Co., Chief Executive Bill Ford announces Ford Motor will partner with Chinese-based, Amperex Technology, to build an all-electric vehicle battery plant in Marshall, Michigan, during a press conference in Romulus, Michigan U.S., February 13, 2023.
Ford and Amperex Technology
Chief Executive Bill Ford announces Ford Motor will partner with Chinese-based, Amperex Technology, to build an all-electric vehicle battery plant in Marshall, Michigan, during a press conference in Romulus, Michigan, February 13, 2023.
“We looked at all the factors. Those included demand and the expected growth for EVs, our business plans, our product cycle plans, the affordability and business to make sure we can make a sustainable business out of this plant,” Ford Chief Communications Officer Mark Truby said during a media briefing. “After assessing all that, we are now good to confirm that we’re moving forward with the plant, albeit in a slightly smaller size and scope than what we originally announced.”
Ford-UAW employees deal
Truby said the plant is still expected to open in 2026, even though the company halted production of the facility for roughly two months during collective bargaining with the UAW (United Auto Workers). The talks ended last week as Ford-UAW employees ratified a deal that included significant wage increases and a path for battery workers at the plant to be included under the record agreement, if organized by the union.
