Ford Motor Company’s CEO, Jim Farley, announced that it will be partnering with Contemporary Amperex Technology, the world’s largest battery company, to build an electric-vehicle battery plant in Marshall, Michigan. However, Ford is scaling back on its plans for the plant due to slower than expected consumer adoption of electric vehicles, along with increased labor costs and a need to cut expenses. This decision represents a broader trend of automakers scaling back on electric vehicle investments due to challenges such as high costs and supply chain issues.
Ford is now reducing the plant’s production capacity 43% and decreasing expected employment from 2,500 jobs to 1,700 jobs. The company has not disclosed the reduced investment amount, but it is estimated to be around $2 billion. The company’s retreat from EVs is part of a larger plan to cut or delay about $12 billion in previously announced EV investments, including postponing the construction of another electric vehicle battery plant in Kentucky.
The plant faces political pushback and protests from residents, as well as scrutiny from U.S. lawmakers seeking to review the licensing deal between Ford and CATL amid heightened tensions between the U.S. and China. Despite these challenges, Ford is still committed to the plant, which is expected to open in 2026 and produce lithium iron phosphate (LFP) batteries with the goal of increasing EV production and profit margins.
This announcement comes as part of a strategic shift in the industry, with Ford following Tesla in using LFP batteries in some of its vehicles to reduce the amount of cobalt needed for battery cells. Amidst a changing landscape for electric vehicles, Ford is repositioning its strategy to ensure long-term sustainability and success in the EV market.