Ford is resuming construction but adjusting its plans for a $3.5 billion battery plant in Michigan. Originally unveiled in February, Ford paused construction of the facility in September, and now it is being scaled back due to challenges stemming from slower-than-anticipated EV adoption and political scrutiny due to its partnership with Chinese battery manufacturer Contemporary Amperex Technology Co. (CATL).
The decision, announced on Tuesday, involves a significant 43% reduction in production capacity, from the initially planned 35 gigawatt hours (GWh) to 20GWh per year. As a result, the expected employment has also been revised down from 2,500 jobs to 1,700 jobs. The recent agreement with the United Auto Workers (UAW), which includes significant wage increases, also impacted the decision due to increased labor costs. The Detroit-based automaker did not disclose how much it now plans to spend on the plant. (via CNBC)
This move is part of Ford’s broader strategy, announced last month, to cut or delay approximately $12 billion in previously earmarked EV investments, including the postponement of construction for another EV battery plant in Kentucky.
The scaling back of plans reflects a broader trend amongst legacy automakers as they reassess their EV ambitions in the face of lower-than-expected demand, challenges in supply chains, and technological hurdles. The political landscape also played a role, with the Michigan plant drawing attention from federal and local officials, resulting in protests and calls for a review of the licensing deal between Ford and CATL amid tensions between the US and China.
The Michigan plant, set to open in 2026, is part of Ford’s goal of producing two million electric vehicles globally by late 2026.