DETROIT (AP) — Ford Motor Co. is resuming construction on a Michigan electric vehicle battery plant that the company postponed two months ago during a strike by the United Auto Workers union.
But the automaker said that due to slowing electric vehicle sales growth, it will scale back the factory's size, cutting the number of planned jobs by about one third to 1,700 from 2,500. The annual battery cell output will drop from enough for 400,000 vehicles per year to about 230,000.
Ford put the plant, originally to cost $3.5 billion, on hold in late September as the union went on strike at targeted assembly plants run by Ford, General Motors and Jeep maker Stellantis. The contract dispute ended last week with workers at all three voting 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 could make a sustainable business out of the factory in Marshall, about 100 miles (160 kilometers) west of Detroit.
“We are now good to confirm that we are moving forward with the plant,” he told reporters.
The plant will open in 2026 on the same timeline as the company set when it announced the factory 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 lower range and cost, or pay more for higher range and power.
Unlike the company's other battery plants that are joint ventures, the Marshall factory will be a fully owned Ford subsidiary staffed by Ford workers. But China’s Contemporary Amperex Technology Co. Ltd., or CATL, which is known for its lithium-iron-phosphate expertise, would supply technology, some equipment and workers.
Truby said he wasn’t sure how much the company would spend on the scaled back plant.
U.S. electric vehicle sales are still growing at a high rate, but not as fast as they were last year, causing many automakers to slow their battery and assembly plant building plans.
In June of last year, for instance, electric vehicle sales were growing about 90% year over year, according to Motorintelligence.com. But by June of this year, the growth rate had slowed to about 50%, and automakers are fearful it will slow even further with consumers having reservations about how far they can travel and whether charging stations will be available.
Michigan Gov. Gretchen Whitmer told reporters after a bill signing Tuesday that the incentive package promised to Ford would be reduced, saying that “when one aspect is resized, so is the other.” Specifics on the new package would come from the Michigan Economic Development Corporation, which handles the state’s incentive fund for economic developments, she said.
The state has allocated nearly $1.7 billion in incentives for the project, and added $65 million in October for site readiness.
When it announced third-quarter earnings 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 that was announced two years ago. The company also is trimming Mustang Mach-e production and delaying other spending on EVs 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 bullish on EVs. “While there is growth both in the U.S. and worldwide, clearly the growth isn’t at the rate that we and others had expected,” he said.
Sales of Ford's Mustang Mach-E electric SUV, its top-selling electric vehicle, have struggled this year. They're up only 1.5% through October and were down 7% last month. Sales of the F-150 Lightning electric pickup are up 42.7% for the year. Shares of Ford fell just over 1.4% Tuesday in a largely down day in the markets for automakers.