Ford steps back from $3.5 billion Michigan battery plant as EV demand slowdown

Ford Motors is stepping back from the plans to establish a $3.5 billion battery plant in Michigan as EV demand among consumers is moving slower than expected with rising labor costs.

Ford executives including CEO Jim Farley and Chair Bill Ford announced this plan in February. It quickly became a political target due to its connection with Chinese battery manufacturer Contemporary Amperex Technology AKA CATL.

The plant is wholly owned by Ford and the company is only sourcing CATL technologies to produce new lithium iron phosphate or LFP batteries for EVs.

As a result, the auto company said on Tuesday that it is cutting production capacity by roughly 43% to 20 gigawatt hours per year and reducing expected employment from 2,500 jobs to 1,700 jobs.

Meanwhile, Ford remains silent on the new investment in the plant. However, with these reductions, the investment would reach as low as $2 billion.

Aside from Ford, this new decision would indirectly hurt the expansion of EVs in the global market. The demand for vehicles is slower than expected due to high costs. However, the technologies involved in the production are key to controlling the price tag of EVs. Within that domain, batteries are essential.

This new announcement follows Ford’s last month’s notice to cut or delay about $12 billion on previously announced EV investments.

(source – CNBC)