Ford’s Michigan Battery Plant Construction Paused during Contract Negotiations

Ford Motor Co. announced the temporary suspension of construction for its $3.5 billion electric vehicle battery plant in Michigan. The company aims to ensure that the factory can operate competitively before resuming construction. The decision comes amid ongoing contract talks with the United Auto Workers (UAW) union, which is pushing for better wages and representation for workers in battery factories.

The UAW went on strike against Ford, General Motors, and Stellantis on September 15. Initially, one vehicle assembly plant from each automaker was targeted, and last week, the strike expanded to include parts warehouses. However, Ford was excluded from the expansion due to progress in negotiations.

Located in Marshall, Michigan, about 100 miles west of Detroit, the plant was announced in February and was expected to employ around 2,500 workers. The facility aimed to produce lower-cost batteries for various new and existing vehicles, contributing to the evolution of electric vehicles as a viable and affordable option for consumers.

Despite the initial plans, construction of the battery plant has been paused, with spending limited. Ford spokesperson TR Reid confirmed the temporary halt, highlighting that no final decision has been made regarding the investment. The pause in construction is influenced by multiple factors, including local opposition to the factory location and concerns about a Chinese company’s involvement in the project.

UAW President Shawn Fain expressed disappointment with Ford’s decision, referring to it as a “barely-veiled threat” to cut jobs at a plant that has not even opened yet. Fain emphasized the union’s request for a fair transition to electric vehicles, condemning Ford’s intention to maintain lower wages.

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The factory, once operational in 2026, was projected to manufacture battery cells using lithium-iron-phosphate (LFP) chemistry. This chemistry is cost-effective compared to the nickel-cobalt-manganese chemistry used in current electric vehicle batteries. With LFP batteries, consumers would have the option to choose between lower cost and range or pay more for higher range and power.

Ford planned for the subsidiary to own and operate the factory while utilizing technology, equipment, and workers from China’s Contemporary Amperex Technology (CATL), known for its expertise in lithium-iron-phosphate batteries. However, concerns raised by conservative rural communities in southern Michigan, such as opposition to a Chinese company’s involvement and the anticipated traffic impact, likely influenced Ford’s decision to choose a different location.

The announcement of the battery plant occurred against the backdrop of strained U.S.-China relations, with the Biden administration offering tax credits to incentivize EV battery supply chain development within the United States. To qualify for a full $7,500 tax credit per vehicle, EV batteries cannot include metals or components sourced from China. Ford’s deal structure allows the company to take advantage of U.S. factory tax credits included in the Inflation Reduction Act.

Ford’s decision to pause construction raises questions about the future of the battery plant. While the strike may have played a role in the temporary halt, opposition from the local community appears to be a more significant factor. Analyst Sam Abuelsamid suggests that selecting a site closer to Detroit, where the idea of a battery plant with Chinese involvement may be more accepted, could have been a more favorable decision.

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As the situation unfolds, it remains to be seen whether Ford will proceed with the Michigan battery plant or explore alternative options. The evolving landscape of electric vehicles and the intricacies of contract negotiations and local opposition present challenges for the company as it navigates the path toward a sustainable and competitive future. For more information on Ford’s initiatives, visit the Ames Farm Center.