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Ford shrinks its EV battery factory plans in Michigan

Ford shrinks its EV battery factory plans in Michigan

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Ford will no longer invest the full $3.5 billion for a new Michigan battery plant as the company faces rising labor costs and slowing electric vehicle demand.

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Ford logo on the front of an F-150 Lightning
Closeup of an all-electric F-150 Lightning.
Photo by Andrew Hawkins / The Verge

Ford announced it is cutting production capacity on its upcoming electric vehicle battery plant, amid cooling customer demand for purchasing EVs and rising labor costs. The automaker says it will reduce its original $3.5 billion planned investments to build the Michigan plant to somewhere around $2 billion and is now only expecting to hire 1,700 workers instead of 2,500.

Ford had originally announced the ambitious Michigan battery plant in February in partnership with China’s Contemporary Amperex Technology (CATL), a company that makes LFP (lithium iron phosphate) batteries. The plant will now only produce about 20 gigawatt-hours of batteries per year, which is about a 43 percent cut.

In order for EVs to qualify for up to $7,500 in federal tax credits, automakers must source at least 40 percent of their battery materials from North America or US trading partners by 2024. Ford’s partnership with CATL has also made it a target of anti-China GOP politicians.

The automaker still plans to open the new facility on target in 2026 despite recent production halts during the UAW labor union strike last month. The company also recently put off plans to build its Kentucky battery plant.