DETROIT– Ford Motor Co. is resuming construction on 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 will scale back the size of the factory, reducing the number of planned jobs by about a third from 2,500 to 1,700. Annual production of battery cells will drop from enough for 400,000 vehicles per year to about 230,000.
Ford shut down the plant, which was originally slated to cost $3.5 billion, in late September when the union went on strike against targeted assembly plants of Ford, General Motors and Jeep maker Stellantis. The contract dispute ended last week when employees of all three workers voted to ratify new agreements.
Spokesman Mark Truby said Tuesday that the company looked at growth forecasts for electric vehicle sales, its EV product plans and whether it can become a sustainable business from the factory in Marshall, about 100 miles west of Detroit.
“We can now confirm that we are making progress with the plant,” he told reporters.
The plant will open in 2026 on the same timeline the company set when it announced the plant in February. It will 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 will be able to choose between a battery with a lower range and lower costs, or pay more for a higher range and more power.
Unlike the company’s other battery plants, which are joint ventures, the Marshall plant will be a wholly owned subsidiary of Ford, staffed by Ford 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.
Truby said he wasn’t sure how much the company would spend on the scaled-back plant.
Electric vehicle sales in the U.S. are still growing at a high pace, but not as fast as last year, causing many automakers to delay their battery and assembly plant construction plans.
According to Motorintelligence.com, electric vehicle sales grew by about 90% year over year in June last year. But by June this year the growth rate had fallen to around 50%, and carmakers fear this will slow further as consumers question how far they can travel and whether charging stations will be available.
Michigan Governor Gretchen Whitmer told reporters after signing a bill Tuesday that the stimulus package promised to Ford would be reduced, saying that “when one aspect is resized, the other is resized as well.” Details about the new package would come from the Michigan Economic Development Corporation, which administers the state’s economic development stimulus fund, she said.
The state has allocated nearly $1.7 billion in incentives for the project and added $65 million for site readiness in October.
When reporting third-quarter results in October, Ford said a slowdown in electric vehicle sales and prices has led to a delay in plans to build one of two new joint-venture EV battery factories in Kentucky. construction, which were announced two years ago. The company is also scaling back production of the Mustang Mach-e and delaying other electric vehicle spending totaling $12 billion, Chief Financial Officer John Lawler said.
Truby said scaling back the Michigan plant was part of the $12 billion. He said the company is still optimistic about electric cars. “While there is growth both in the US and globally, growth 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 car, have struggled this year. They are up just 1.5% through October and down 7% last month. Sales of the F-150 Lightning electric pickup are up 42.7% this year. Shares of Ford fell just over 1.4% on Tuesday on a largely down day in automaker markets.