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Msg  2425 of 2456  at  11/22/2023 12:18:59 PM  by


Ford Downsizes Plan for Michigan Battery Factory, Citing Slower EV Demand; Automaker

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Ford Downsizes Plan for Michigan Battery Factory, Citing Slower EV Demand; Automaker restarts work on plant, which will use tech from China's CATL

; New York, N.Y.
Just a few months ago, Ford announced it had paused construction on the politically divisive EV battery plant.

Ford Motor is moving forward on construction of a battery plant in Michigan but at a reduced size from original plans, citing a pullback in the outlook for future electric-vehicle demand .

Ford in September paused work on the factory , in Marshall, Mich. At the time, the company said it was reassessing its ability to competitively operate the plant, which will make batteries using technology from China's Contemporary Amperex Technology Co. Congressional Republicans have criticized the China connection and argued against the project qualifying for federal tax subsidies.

On Tuesday, Ford said it has resumed work at the site, but downsized the scope of the project, with plans to produce roughly 40% fewer batteries than originally planned. It now expects to employ about 1,700 workers at the facility when the plant opens, scheduled for 2026, down from about 2,500.

"We're still very bullish on EVs," a Ford spokesman told reporters Tuesday. "Clearly, the growth isn't at the rate that we and others had expected."

Ford's investment in the project, originally planned for $3.5 billion , will be reduced, although the company didn't provide an updated number.

The project has faced political blowback because of the plan to license intellectual property from CATL, the world's largest battery maker. Many Republicans have argued against any federal subsidies for battery production going to the factory under the federal Inflation Reduction Act, arguing it would benefit China. Some House committees have opened investigations into the deal.

Republicans also have said EVs that use batteries from the future Michigan plant shouldn't qualify for the $7,500 consumer credit under the IRA, which requires mostly domestically sourced batteries.

Many Michigan Democrats support the project, saying it would generate jobs and economic activity. On Tuesday, Gov. Gretchen Whitmer's office praised Ford's decision to restart the project, saying it would lead to billions of dollars in investment.

Ford has said the factory would be wholly owned by Ford and create American jobs. On Tuesday, the Ford spokesman said the decision to reduce the project's size wasn't related to the political scrutiny.

"We're confident in terms of the IRA benefits," he said.

In recent months, automakers have responded to a cooling in EV demand by dialing back their electric vehicle investments or the pace of their new-model rollouts.

Sales of electric vehicles still are growing rapidly compared with the broader car market. But the pace of that growth has cooled, despite a number of new electric-model introductions in the U.S. this year.

EV sales this year rose 49% through October, compared with 69% from the same period last year, according to data from research firm Motor Intelligence. Sales overall, including EVs and internal-combustion-engine vehicles, were up 12.5%.

Ford plans to make batteries at the Michigan factory that use a different, less-expensive type of chemistry, called lithium-iron-phosphate, or LFP.

The technology is commonly used in China and is lower cost than the chemistry primarily used in North America, a combination of nickel, cobalt and manganese. Ford is building three other battery factories, in Tennessee and Kentucky, to make batteries that use that chemical mix.

Ford's move to halt work on the plant in September came during the United Auto Workers strike and drew criticism from UAW President Shawn Fain, who called it a threat to cut jobs. A spokesman on Tuesday declined to comment on Ford's decision to resume the project at a reduced scale.

Ford and other automakers have cited the need to offer more-affordable EVs to entice buyers. Ford executives have said the use of the less-expensive LFP batteries would allow it to offer more-competitive prices and ultimately sell more electrics.

"With our LFP batteries, we'll have the lowest or one of the lowest-cost batteries assembled in the U.S.," Ford Chief Executive Jim Farley told analysts in September.


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