Ford, a leading Detroit automaker, is scaling back its ambitious investment plans for a $3.5 billion battery facility in Michigan, citing a range of challenges including slower-than-expected consumer shift to electric vehicles, rising labor costs, and the company’s cost-cutting strategies.
This facility, announced in February by Ford executives Bill Ford and CEO Jim Farley, was to be a collaboration with Chinese battery maker Contemporary Amperex Technology (CATL), sparking political scrutiny despite being a fully owned Ford venture. Ford planned to use CATL’s technology for producing lithium iron phosphate (LFP) batteries, a key component for its electric vehicle (EV) lineup.
However, on November 21, the company revealed a significant reduction in its projections, decreasing the expected job creation from 2,500 to 1,700 and slashing its manufacturing capacity by about 43% to 20 gigawatt hours per year. The investment now stands at around $2 billion, reflecting the reduced scale of operations.
This decision mirrors a broader trend in the auto industry, which is witnessing a global pullback from EVs amid various challenges. These include supply chain issues, battery technology complexities, and rising costs, all contributing to lower-than-anticipated demand for EVs.
Furthermore, Ford has recently announced plans to cut or delay around $12 billion in investments earmarked for EV projects. This includes scaling back operations at its Marshall, Michigan, facility and postponing the construction of a second EV battery plant in Kentucky.
Mark Truby, Ford’s Chief Communications Officer, emphasized the thorough review process leading to this decision. The company considered numerous factors such as EV demand projections, business and product cycle plans, affordability, and overall sustainability of the business. Despite the downsizing, Ford remains committed to proceeding with the plant, albeit on a smaller scale and scope than initially envisioned.
DON’T MISS | New Euro NCAP-ANCAP MOU: Celebrating 30 Years of Global Safety Leadership
