Ford downsizes EV battery factory in Michigan

Ford CEO Jim Farley said at a press conference that Ford Motor Co., Ltd. is partnering with China-based Contemporary Amperex Technology Co., the world’s largest battery company, to open a new factory in Michigan on February 13th. announced that it will build an electric vehicle battery factory in Marshall. 2023, Romulus, Michigan.

Bill Priano | Getty Images News | Getty Images

Detroit – ford motor The company is scaling back plans for a $3.5 billion battery factory in Michigan as consumers move more slowly than expected to electric vehicles, labor costs rise and the company moves to cut costs.

Ford executives including CEO Jim Farley and Chairman Bill Ford first announced This is the facility in February. His ties to Chinese battery maker Contemporary Amperex Technology (CATL) quickly made him a political target. The plant is a wholly owned subsidiary of Ford, but the U.S. automaker has licensed technology from CATL to produce new lithium iron phosphate (LFP) batteries for EVs.

ford said on tuesday It is cutting production capacity by about 43% to 20 gigawatt hours per year and reducing projected employment from 2,500 to 1,700 people. The company did not say how much investment in the factory would be reduced. Based on reduced production capacity, it would still require an investment of approximately $2 billion.

The decision will add to the global automakers’ recent move away from EVs. Demand for vehicles is lower than expected due to high costs, supply chain and battery technology issues.

The cuts at the Marshall, Michigan, plant are part of a plan Ford announced last month. Approximately $12 billion in reductions or deferrals In previously announced EV investments. The company will also postpone construction of another electric vehicle battery factory in Kentucky.

Ford Motor Company CEO Bill Ford said during a press conference in Romulus, Michigan, on February 13, 2023, that Ford Motor Co., Ltd. is partnering with China-based Amperex Technology, announced that it will build an all-electric vehicle battery factory in Marshall, State.

Rebecca Cook | Reuters

“We considered all factors, including the demand and expected growth of EVs, our business plan, product cycle planning, and affordability to ensure we generate sustainable business from this factory. and business,” said Ford Chief Communications Officer. Mark Truby said at a media briefing. “After evaluating all of this, we can confirm that we are proceeding with construction of the plant, albeit at a slightly smaller size and scope than originally announced.”

Truby said the company still expects the factory to be operational in 2026. Production stoppage The facility was closed for approximately two months during collective bargaining with the United Auto Workers union.Negotiations ended last week As approved by Ford UAW employees The agreement included significant wage increases and a path for factory battery workers to be included in record agreements if unionized.

The UAW did not respond to requests for comment.

Truby said Ford’s decision to scale back the program factored in increased labor costs. Ford Chief Financial Officer John Lawler said last month about the new deal. Add $850 to $900 per unit Can be assembled at labor cost.

Lawlor declined to estimate how much the contract, which runs through April 2028, would cost the company. Deutsche Bank estimated that the increase would be $6.2 billion over the life of the agreement.

“We remain very bullish on EVs and EV strategies, but it’s clear that while there is growth both in the U.S. and globally, it’s not at the rate that we or others expected,” Truby said. Ta. “We are trying to be smart about this and how we move forward.”

The plant has faced political backlash from federal and local officials, including protests by residents of the rural Michigan city.US lawmakers are also demanding To review the license agreement Negotiations were held between Ford and CATL amid rising tensions between the US and China.

Truby reiterated Tuesday that he still believes licensing the technology is better business for the company and the U.S. than importing batteries from overseas. The plant will be the first in the United States to produce LFP batteries.

The lithium iron phosphate (LFP) batteries produced by the plant will replace the more expensive lithium-ion and nickel-cobalt-manganese batteries that Ford currently uses. The new batteries offer a variety of benefits at a lower cost and are expected to help Ford increase EV production and profit margins.

Ford, which currently sources LFP batteries from CATL, will also follow suit. tesla We use LFP batteries in some vehicles to reduce the amount of cobalt needed to manufacture battery cells and high-voltage battery packs.

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