Ford Motor Company, a major player in the U.S. automotive industry, is significantly downsizing its electric vehicle (EV) battery plant currently under construction in Marshall, Michigan. This move comes as the company faces escalating losses in its EV division, with declining sales and rising costs. On Tuesday, Ford announced a reduction of over 40% in the project’s scale and a 30% cut in job creation estimates. Despite these setbacks, Ford expressed confidence in the future of its EV business.
Ford’s statement highlighted a strategic shift in their investment plans. “While our long-term strategy for electric vehicles remains strong, we are adjusting the scale and timeline of some investments,” the company stated. The Marshall project, initially planned to boast a 35-gigawatt-hour capacity and create 2,500 jobs, is now expected to produce around 20 GWh and offer over 1,700 jobs. The revised plan still positions the facility to be Ford’s first battery plant to commence operations, slated for 2026.
The decision to scale back the factory’s size follows less than a year after the initial announcement of the project. In February, Ford had committed $3.5 billion to the plant, supported by Michigan Governor Gretchen Whitmer. The state administration had also pledged nearly $2 billion in subsidies and tax incentives. It remains unclear whether the state will modify its financial support following Ford’s recent announcement. Requests for comments from Governor Whitmer’s office were not immediately answered.
Michigan state House Republican Leader Matt Hall criticized the development, questioning the economic viability of electric vehicles and the effectiveness of the state’s incentives. “This significant reduction in the project’s scope is indicative of a larger problem with the current push for electric vehicles,” Hall stated.
In 2023, Ford’s EV division is expected to incur losses of approximately $4.5 billion. The company’s third-quarter report revealed a loss of $1.3 billion in the EV division, equating to a substantial loss per vehicle sold during that period.
The scaling down of the Marshall battery plant also casts a shadow on President Biden’s green energy goals, which heavily focus on the growth of the EV sector. The administration aims for zero-carbon vehicles to constitute half of all U.S. car purchases by 2030.
Further complicating matters, Ford’s partnership with Contemporary Amperex Technology (CATL), a China-based firm, for manufacturing battery cells at the Marshall plant has drawn significant criticism. Despite Ford’s assertions of commitment to American manufacturing, concerns have been raised about CATL’s links to the Chinese Communist Party and the potential risks to U.S. national security and electric vehicle supply chains. House Republicans, led by Energy and Commerce Chair Cathy McMorris Rodgers and Energy and Commerce Oversight Subcommittee Chair Morgan Griffith, have expressed these apprehensions in a letter to Ford CEO Jim Farley.
This development highlights the complex challenges facing the automotive industry as it transitions to electric vehicles, balancing profitability, national security concerns, and the push for green energy.