Ford is resuming work on an EV battery factory in Michigan on a smaller scale
Ford Motor said Tuesday it was resuming work on an electric vehicle battery plant in Michigan but significantly scaled back its plans, partly because of slow adoption of electric vehicles in the United States.
A company spokesman said Ford now expects the Marshall, Michigan, plant to create 1,700 jobs instead of 2,500, but still expects production to begin in 2026.
Demand for electric vehicles is “not growing at the pace we originally expected,” said Ford spokesman TR Reid. In the most recent quarter, major auto companies like Ford reported that sales of electric vehicles were up, but not at a pace enough to keep up with the Biden administration’s ambitious goals.
The factory was originally slated to produce 35 gigawatt hours of batteries annually, which Ford said would be enough to equip about 400,000 vehicles. Now the plant will produce 20 gigawatt hours annually, enough for about 230,000 vehicles, or a 42.8 percent reduction.
Ford did not specify exactly how much money it would withdraw from the project, but said it would be approximately equal to the reduction in production. If the 42.8 percent production cut were applied to investments, it would represent a reduction of $1.5 billion from the initially announced investment of $3.5 billion.
Ford said in September it was halting construction because it was concerned it would not be able to produce products at a competitive price. At the time, the company was in the midst of contentious negotiations with the United Automobile Workers union.
Rising labor costs were also a factor in Ford’s decision to scale back its plans for the plant, Mr. Reid said. Ford’s contract agreement with the UAW, which has been ratified by union members, increases the top pay for production workers by 25 percent.
The agreement allows UAW members to be transferred to battery and electric vehicle plants under construction, such as the one in Marshall. If workers there choose to unionize, they are protected by the UAW’s contract.
The UAW hopes to keep its membership rates high amid the transition to electric vehicles, but automakers have pushed back, arguing that puts them at a disadvantage against their non-uniformed competitors.
The UAW did not immediately respond to a request for comment Tuesday.
Ford has also faced criticism from conservative lawmakers over its plan to license technology from CATL, a Chinese battery maker. Lithium iron phosphate batteries, or LFP, are not currently produced in the United States. Some US electric car manufacturers, such as Tesla, import LFP batteries from China.
It is not clear whether U.S. companies that license technology from other countries will be eligible for government incentives to promote the shift away from fossil fuels. Mr. Reid said Ford was “confident in the technology licensing agreement for this plant.”