Ford to resume construction of electric vehicle battery plant in Michigan, delayed by strike, but scale back

DETROIT (AP) — Ford Motor Co. is resuming construction of an electric vehicle battery plant in Michigan, which the company postponed two months ago during a strike by the United Auto Workers union.

But the automaker said that due to slowing growth in electric vehicle sales, it would reduce the size of the factory, reducing the number of planned jobs by about a third, from 2,500 to 1 700. Annual battery cell production will increase from 400,000 vehicles per year to around 230,000.

Ford suspended the plant, which was originally expected to cost $3.5 billion, in late September as the union went on strike at targeted assembly plants run by Ford, General Motors and Jeep maker Stellantis. The contract dispute ended last week with the three workers voting to ratify the new agreements.

Spokesman Mark Truby said Tuesday the company reviewed forecasts for electric vehicle sales growth, its electric product plans and whether it could build a sustainable business out of the Marshall plant, about 100 miles away. west of Detroit.

“We are now ready to confirm that we are moving forward with the factory,” he told reporters.

The plant will open in 2026 on the same schedule the company set when it announced the plant in February. It will produce batteries using lithium-iron-phosphate (LFP) chemistry, which is cheaper than the current nickel-cobalt-manganese chemistry currently used in many electric vehicle batteries. Consumers will be able to choose between a battery with lower range and cost, or pay more for higher range and power.

Unlike the company’s other battery plants that are joint ventures, the Marshall plant will be a wholly owned subsidiary of Ford and staffed by Ford employees. But China’s Contemporary Amperex Technology Co. Ltd., or CATL, known for its expertise in lithium-iron-phosphate, would provide the technology, some equipment and workers.

Truby said he wasn’t sure how much the company would spend on the scaled-down plant.

Sales of electric vehicles in the United States continue to grow at a high rate, but not as fast as last year, leading many automakers to slow down their plans to build battery packs and assembly plants .

In June of last year, for example, electric vehicle sales were up about 90% year-over-year, according to Motorintelligence.com. But by June this year, the growth rate had slowed to around 50%, and automakers fear it could slow further as consumers have reservations about how far they can travel and the availability of charging stations. recharge.

Michigan Gov. Gretchen Whitmer told reporters after signing a bill Tuesday that the incentive package promised to Ford would be scaled back, saying “when one aspect is scaled, so is the other.” “. Details of the new program will come from the Michigan Economic Development Corporation, which manages the state’s incentive fund for economic development, she said.

The state allocated nearly $1.7 billion in incentives for the project and added $65 million in October for site preparation.

When announcing its third-quarter results in October, Ford said a slowdown in electric vehicle sales and prices had led to a delay in plans to build one of two new vehicle battery factories joint venture in Kentucky, announced two years ago. The company is also reducing Mustang Mach-e production and delaying other electric vehicle spending totaling $12 billion, Chief Financial Officer John Lawler said.

Truby said the Michigan plant reduction was part of the $12 billion. He said the company is still optimistic about electric vehicles. “While there is growth in the United States and around the world, it is clearly not at the pace we and others expected,” he said.

Sales of Ford’s Mustang Mach-E electric SUV, its best-selling electric vehicle, have struggled this year. They were up just 1.5% through October and were down 7% last month. Sales of the F-150 Lightning electric pickup are up 42.7% year-over-year. Ford shares fell just over 1.4% on Tuesday, in a largely bearish day in automaker markets.

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