Ford cites new tax credits in picking Michigan for $3.5B battery plant

DETROIT — Ford Motor Co. on Monday said it will build a $3.5 billion battery plant in southwestern Michigan because new federal tax credits make a U.S. location more favorable than options in Canada and Mexico.

BlueOval Battery Park Michigan will open in 2026 in Marshall, about 100 miles west of Detroit, as a wholly owned Ford subsidiary operated using technology from Contemporary Amperex Technology Co. Ltd., based in China, the automaker said. Crain's Detroit Business, an affiliate of Automotive News, reported Ford's decision Friday.

The plant will employ 2,500 workers and have the capacity to build 35 gigawatt-hours of lithium iron phosphate cells a year, which is enough to power about 400,000 electric vehicles, Ford said. The automaker, which announced it would partner with CATL last July, said lithium iron phosphate chemistry will help it increase production of EVs and make them cheaper to build.

Ford chose Michigan after Virginia's governor, Republican Glenn Youngkin, removed his state from consideration, saying Ford's partnership with CATL would serve as a "Trojan horse" for China into the U.S., helping the Far East bolster its EV battery dominance and spread its influence. Ford executives on Monday said they are aware of potential political pitfalls, but that the contract is set up to give the automaker control of the plant's operations.

"It's a very global marketplace, especially when it comes to batteries," said Lisa Drake, Ford's vice president of EV industrialization. "LFP technology is already here ... but unfortunately it's always imported. This project is aimed at derisking that by actually building out the capacity and capability to scale out this technology in the U.S., where Ford has control over the manufacturing, production and work force."

Drake said the company also considered sites in Canada and Mexico but picked the U.S. after the Biden administration signed the Inflation Reduction Act, which includes tax credits for localizing battery production.

"The IRA was incredibly important for us," Drake said. "And frankly, it did what it's intended to do."

Union plant

UAW President Ray Curry told reporters that since the plant will be a wholly owned subsidiary of Ford, it will be covered under the automaker’s national union contract and would not require a separate unionization vote only a "card check" from workers.

UAW Ford Vice President Mike Browning, in a statement released by the union: “This facility furthers Ford’s commitment to our members who make EV vehicles. Our members in Local 600 who produce the F-150 Lightning at the Rouge Electric Vehicle Center in Dearborn, Michigan, will install the LFP batteries in the Lightning starting next year ...

"Because of the foresight of collective bargaining, the UAW will be able to organize this new facility using a card check to prove majority interest.”

A card check allows a union to organize a plant when a majority of workers sign cards instead of going through a time-consuming election.

Michigan aggressively pursued the plant, Crain's reported, after Ford snubbed its home state in 2021 with plans to build two sprawling manufacturing campuses in Tennessee and Kentucky. Gov. Gretchen Whitmer on Monday called the news “a big win for Team Michigan.”

Ford CEO Jim Farley said Michigan was the “clear leader” in the negotiations for the site. He said the company also considered locations outside of North America.

Tax breaks

Michigan's economic development arm on Monday approved a deal giving Ford roughly $1 billion in cash and tax breaks for the project, which Marshall's city manager called "a once-in-a-generation economic opportunity." The state said jobs at the plant will pay between $20 and $50 an hour.

"We are committed to leading the electric vehicle revolution in America, and that means investing in the technology and jobs that will keep us on the cutting edge of this global transformation in our industry," Ford Executive Chair Bill Ford said in a statement Monday. "I am also proud that we chose our home state of Michigan for this critical battery production hub."

The automaker said lithium iron phosphate batteries are more durable and charge faster than the nickel cobalt manganese battery packs it uses today. Ford plans to add lithium iron phosphate cells provided by CATL to standard-range versions of the Mustang Mach-E next year and to the F-150 Lightning in early 2024.

Ford said it's on track to produce 600,000 EVs annually by the end of this year and 2 million by 2026, as it attempts to earn share from market leader Tesla Inc.

Bill Ford on Monday said the company may need additional capacity in the future, although the upcoming Marshall site coupled with Blue Oval City should give Ford most of what it needs to reach its current EV production goals.

“Eventually, of course, we’ll need more,” Ford said. “For now, this is what we need. We’ll always be looking to expand capacity. We’re in a growth phase.”