Global Courant
DETROIT– Ford Motor Co. said Monday it is pausing construction of a $3.5 billion electric vehicle battery plant in Michigan until it is confident it can run the plant competitively.
The move comes as the company is in the middle of national contract talks with the United Auto Workers union, which aims to represent workers at battery plants and get them the highest wages.
The UAW went on strike on September 15 against Ford and the other two Detroit automakers, General Motors and Stellantis. The union initially focused on one auto assembly plant from each automaker, expanding to parts warehouses last week. But Ford was spared the expansion because the union said progress was being made in negotiations.
In February, Ford announced plans to build a factory in Marshall, Michigan, that would employ about 2,500 workers to make lower-cost batteries for a variety of new and existing vehicles. Marshall is located about 100 miles west of Detroit and near two major highways.
But Ford spokesman TR Reid confirmed Monday that construction of the plant has been halted and spending on it has been limited.
“There are a number of considerations,” he said in an email. “We have not yet made a final decision on the planned investment there.”
There was also local opposition to the plant location and criticism of a Chinese company’s involvement in the plant, which would be run by a wholly owned subsidiary of Ford.
In a statement, UAW President Shawn Fain called Ford’s move “an embarrassing, thinly veiled threat by Ford to cut jobs” at a plant that has not yet opened.
“We are simply asking for a just transition to electric vehicles, and Ford is instead doubling down on their race to the bottom” with lower wages, he said.
The plant would start making batteries in 2026 and produce enough battery cells to supply 400,000 vehicles per year, Ford said.
It would produce batteries with a lithium iron phosphate (LFP) chemistry, which is cheaper than the current nickel-cobalt-manganese chemistry now used in many EV batteries. Consumers can then choose between a battery with a lower range and lower costs, or pay more for a higher range and more power.
Ford said the subsidiary would own the plant and hire the workers. But China’s Contemporary Amperex Technology Co. Ltd., or CATL, known for its expertise in lithium iron phosphate, would provide technology, certain equipment and employees.
Republican state Rep. Sarah Lightner, whose district includes Marshall, said Monday that Ford’s news “came out of the blue.”
“We’re still gathering information because there are a lot of moving parts,” Lightner said.
Although the state allocated nearly $1.7 billion in incentives for the project, not all of the money has been spent and clawbacks are in effect, added Lightner, the minority vice chairman of the House Appropriations Committee.
“Obviously the strikes could probably have something to do with it,” Lightner said.
Sam Abuelsamid, an analyst with Guidehouse Insights, said Ford’s decision may be related to the strike but more likely reflects opposition to the plant among people in a conservative rural area of southern Michigan.
“They don’t want the factory, they don’t want the traffic, and they don’t want anything associated with a Chinese company,” he said.
Abuelsamid said he was surprised Ford did not choose a location closer to Detroit, which he said would be less hostile to the idea of a battery factory that would use a Chinese company’s intellectual property.
The factory was announced at a time when US-China relations are tense and the Biden administration is offering tax breaks to companies to create an American supply chain for EV batteries. In order to provide customers with an all-American tax credit of $7,500 per vehicle, EV batteries must not contain any metals or components from China.
The structure of the deal allows Ford to take advantage of U.S. factory tax credits in the Inflation Reduction Act.
Earlier this year, Virginia dropped out of the race for the same Ford plant after Republican Governor Glenn Youngkin characterized the project as a “front” for the Chinese Communist Party that could raise national security concerns. Virginia had not offered Ford an incentive package at the time.
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Associated Press writers Joey Cappelletti in Lansing, Michigan, and David Koenig in Dallas contributed to this report.
