Ford scales back Michigan battery plant, restarts construction

By Joseph White

DETROIT (Reuters) -Ford Motor will scale back the investment, capacity and the number of jobs planned for an electric-vehicle (EV) battery plant in Michigan that has drawn fire from U.S. lawmakers for its use of technology supplied by Chinese battery maker CATL, the automaker said on Tuesday.

Ford (NYSE:) said it would restart construction of the factory near Marshall, Michigan, after being paused two months ago.

The No. 2 U.S. automaker plans to start producing low-cost lithium-iron batteries by 2026 based on technology licensed from CATL. Ford will own the factory, and has agreed to give the United Auto Workers the opportunity to organize the plant’s workers without a vote.

The company’s ties with CATL have drawn fire from U.S. lawmakers, who oppose the country’s EV subsidies flowing to a Chinese entity.

Representative Mike Gallagher, a Republican who chairs House committee on China, said on Tuesday Ford’s reported decision was disappointing.

“The American people deserve better from an iconic U.S. company that receives massive taxpayer subsidies. Ford needs to call off this unethical deal for good,” Gallagher said.

Ford is pushing for the U.S. Treasury Department to approve lithium-iron, or LFP, batteries made at the Michigan factory to qualify for Inflation Reduction Act EV subsidies. Ford is already using imported LFP batteries in its Mustang Mach-E electric SUV.

“We are confident in terms of IRA benefits,” Ford spokesman Mark Truby told reporters in a teleconference on Tuesday.

A Treasury spokeswoman did not comment.

Ford said it was scaling back its original plans to spend $3.5 billion to make the Blue Oval Battery Park Michigan big enough to produce 35 gigawatt hours of batteries annually and employ about 2,500 people.

Ford now plans to cut the Michigan battery plant’s capacity to 20 gigawatt hours and reduce hiring to 1,700 jobs.

Rival General Motors (NYSE:) has also slowed investment in new EV capacity for North America as rising interest rates have slowed the growth in demand. GM said on Tuesday it will hold a call on Nov. 29 to brief investors on its outlook.

Ford shares fell 1.5% while GM closed down 2.2% and Stellantis (NYSE:) dropped 2.1% in New York trading on Tuesday.

The Detroit Three automakers all face higher labor costs in the U.S. under newly ratified contracts with the United Auto Workers.

Ford’s capital investment will be reduced as well, Truby said, without giving an exact figure. He indicated the total investment will be proportional to the 40% reduction in capacity. That indicates a new price tag of about $2 billion.

Ford said in October that it would cut future EV investments overall by $12 billion compared with previous plans. The company has previously postponed construction of a battery factory in Kentucky and another in Turkey.