Ford stops building $3.5B battery plant in Michigan due to China connection.
Ford Halts Construction of $3.5 Billion EV Battery Plant in Michigan
Ford Motor Company announced on Monday that it is pausing the construction of a $3.5 billion electric vehicle (EV) battery plant project in Michigan. The project has faced criticism due to its ties to China.
“We’re pausing work, and we’re going to limit spending on construction at Marshall until we’re confident about our ability to competitively run the plant,” said Ford spokesman T.R. Reid.
There are several factors that prompted this decision, including the ongoing strike by the United Auto Workers (UAW) union. However, Ford has not made a final decision about the investment.
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Republicans in Congress have been investigating Ford’s battery plant plan in Marshall due to its ties to China-based company Contemporary Amperex Technology Co. Ltd. (CATL), the world’s largest EV battery maker.
Under a licensing agreement, CATL will provide the EV battery technology, equipment, and workers, while a Ford subsidiary will own the factory and employ the workers.
Earlier, Ford had announced that production at the Marshall battery plant, named Blue Oval, would begin in 2026.
After completion, the plant was expected to produce enough batteries for 400,000 EVs annually.
The auto industry is closely monitoring new rules regarding future EV tax credits as they make decisions on battery production.
The Inflation Reduction Act, passed in 2022, will eliminate $7,500 consumer EV tax credits if any battery components are manufactured or assembled by a “foreign entity of concern.”
Ford is awaiting guidance to determine if the batteries produced by the Marshall plant meet the requirements.
UAW Strike In Background
The construction halt at the Marshall facility coincides with an ongoing labor strike by the United Auto Workers (UAW) union, which is targeting Ford, General Motors, and Stellantis simultaneously.
Last Friday, the union escalated its strike against General Motors and Stellantis but spared Ford from further walkouts.
While progress has been made in negotiations between the UAW and Ford, significant gaps still need to be addressed before a new labor deal is reached.
The UAW expanded its strike to include 38 parts and distribution facilities across 20 states for General Motors and Stellantis.
Marshall Plant Controversy
In February 2023, Ford announced plans to build a new $3.5 billion plant in Marshall, Michigan. The plant would produce lithium-iron-phosphate batteries, known as LFP, which are cheaper but less energy-dense than the current market-dominating nickel-cobalt-manganese batteries.
Under the licensing agreement, a Ford subsidiary will own the plant, while China-based CATL will provide equipment, technology, and workers.
However, the plant has faced criticism due to concerns about CATL’s ties to the Chinese Communist Party (CCP) and potential national security risks.
Locals have also expressed concerns about transparency, loss of farmland, and the impact on the small town.
One concern is the proximity of the intended battery park site to the Battle Creek Air National Guard Base, which hosts a ground control station supporting U.S. missions.
Marshall Area Economic Development Alliance (MAEDA) has stated that the EV plant does not pose any national security issues.
Congressional lawmakers have sought to review the licensing agreement, fearing that it will contribute to China’s dominance in EV battery technology and involve the use of U.S. taxpayer dollars.
Ford has defended the deal, emphasizing its investment in the United States and job creation.
Terry Wu contributed to this report.
What concerns have been raised about Ford’s partnership with CATL and the feasibility of the battery plant project
Trike by the United Auto Workers (UAW) union. The strike, which began on September 13, has disrupted operations at several Ford plants across the country, including the Dearborn Truck Plant and the Kansas City Assembly Plant. The UAW is seeking higher wages, better benefits, and improved working conditions for its members.
The strike has not only affected Ford’s production, but it has also had an impact on the construction of the battery plant in Marshall. The company has limited its spending on construction until the labor dispute is resolved. The UAW strike has created uncertainties for Ford, and it wants to ensure that it can competitively run the plant before proceeding with the investment.
While the UAW strike is one factor contributing to the construction halt, there are other concerns surrounding the battery plant project. Republicans in Congress have raised questions about the ties between Ford and CATL, the Chinese battery maker. There have been concerns about intellectual property theft and potential national security risks associated with partnering with Chinese companies.
Under the licensing agreement with CATL, Ford’s subsidiary would own the factory and employ the workers, while CATL would provide the battery technology, equipment, and workers. The partnership with CATL is crucial for Ford’s battery production ambitions, as the Chinese company is the world’s largest EV battery maker.
However, the scrutiny from Congress and the ongoing UAW strike have raised doubts about the feasibility and profitability of the project. Furthermore, a recent report by the Parliamentary Budget Office (PBO) suggested that EV battery plant deals would take 20 years to break even financially. This adds to the concerns surrounding the project’s viability.
The construction halt at the Marshall facility is a setback for Ford’s plans to increase its presence in the EV market. The company had previously announced that production at the battery plant would begin in 2026, and it aimed to produce enough batteries for 400,000 EVs annually. However, with the current challenges and uncertainties, Ford is reconsidering its investment and awaiting guidance on the EV tax credit requirements.
The decision to pause the construction reflects the importance of carefully evaluating all factors before proceeding with a major investment. Ford’s hesitation demonstrates the complexities and risks involved in building an EV battery plant, especially when it involves partnerships with foreign companies and is subject to evolving regulatory requirements.
Ultimately, Ford’s ability to competitively run the plant and meet the demands of the EV market will determine the future of the project. The company must carefully assess the economic viability, regulatory compliance, and national security implications before making a final decision on the construction of the $3.5 billion battery plant in Michigan.
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