Ford scales down EV battery plant in Michigan

Ford Motor Co. said it will restart construction on the electric vehicle battery plant it halted in Marshall, Mich., two months ago, but it will be substantially smaller than originally planned.

The project is expected to create 1,700 jobs, a 32 percent reduction from the 2,500 announced previously. Planned capacity of the lithium iron phosphate battery plant is being slashed by more than 40 percent to just 20 gigawatt hours. Total investment in the plant will likely be reduced by the same measure — to roughly $2.2 billion from $3.5 billion, Mark Truby, chief communications officer for Ford, said Tuesday.

Production of the LFP batteries, which the automaker is manufacturing by licensing technology from Chinese giant CATL, is still anticipated to begin in 2026.

“We’ve been studying this project for the past couple of months, and I think we’re all aware that EV adoption is growing, and we expect that to continue actually, but it’s not growing at the pace that I think ourselves and the industry had expected,” Truby said on a call with reporters.

The announcement comes on the heels of the UAW ratifying its contract with Ford, saddling the company with higher labor costs as it navigates the pricey transition to EVs. Ford said a month ago that it would delay construction on one of its mammoth battery plants in Kentucky as it reconsiders $12 billion in EV-related capital expenditures and looks to drive down costs generally throughout the business.

Local and state officials had expressed confidence that the project would move forward after the company emerged from the six-week strike, but Ford let on that there could be more at play than the UAW dispute. The battery plant's ties to CATL have raised not only political controversy but also questions of whether it would be eligible for lucrative federal tax credits.

Truby pointed to demand as the primary factor in its decision to downsize the Marshall project. He said Ford can handle the higher wage structure should the UAW successfully organize the plant and bring it under the master agreement, and that the company expects to benefit from lucrative tax credits despite political opposition to CATL’s involvement.

“We want to be really disciplined about how we allocate capital and think about matching production and future capacity based on demand,” he said, adding that the plant could increase in size if demand grows.

Ford had Michigan on pins and needles when it stopped construction in Marshall, where the project had slogged through local opposition to make it to the finish line. Though Ford stopped pouring building foundations, generic site prep work continued.

The project — called BlueOval Battery Park Michigan — received roughly $1.7 billion in state subsidies, including a $210 million Critical Industry Program grant to Ford, a Renaissance Zone tax exemption worth $772 million over 15 years, $630 million for the Michigan Department of Transportation and the Marshall Area Economic Development Alliance, and $120 million for other site prep work.

Officials have said money for the site prep work would have to be spent regardless of the end user and that Ford does not receive any cash directly until it fulfills certain project criteria.

Truby said he expects incentives for the project will be reduced in tandem with the lower jobs count. Crain’s inquired with the Michigan Economic Development Corp. and Gov. Gretchen Whitmer’s office for more information.

Ford isn’t the only automaker struggling to balance EV production plans with weaker-than-anticipated adoption growth. Its crosstown rival General Motors announced in October that it would be delaying EV production as it attempts to manage costs and improve production flow.

Ford announced the Marshall plant in February as a core part of its plan to make more affordable EVs. LFP batteries, which are cheaper to produce, still remain an important part of the business model, Truby said. The company is importing batteries from CATL for the Mustang Mach-E as it builds out its domestic production capacity. Truby said Ford still expects to be the first automaker to have both LFP and NCM (nickel, manganese, cobalt) batteries in the market.

“While we remain bullish on our long-term strategy for electric vehicles, we are re-timing and resizing some investments,” Ford said in a statement. “We are pleased to confirm we are moving ahead with the Marshall project, consistent with the Ford+ plan for growth and value creation. However, we are right-sizing as we balance investment, growth, and profitability.”