Ford Pauses Construction of Michigan Electric Vehicle Battery Plant

Ford Motor Co. has announced that it will temporarily halt construction of a $3.5 billion electric vehicle battery plant in Marshall, Michigan. The decision comes as Ford is engaged in contract talks with the United Auto Workers (UAW) union, which is pushing for representation of workers at battery factories and higher wages. The UAW had launched a strike against Ford, as well as General Motors and Stellantis, on September 15. Initially, only one plant from each automaker was targeted, but the union expanded the strike to include parts warehouses last week, excluding Ford due to progress in negotiations.

The battery plant, which was planned to employ around 2,500 workers, would produce lower-cost batteries for both new and existing vehicles. Ford said that the subsidiary would own the factory and employ the workers, with China’s Contemporary Amperex Technology Co. Ltd. (CATL) supplying technology, equipment, and workers. However, the location of the factory has faced opposition, as some locals are critical of the involvement of a Chinese company.

The UAW president, Shawn Fain, described Ford’s decision to pause the construction as a “shameful, barely-veiled threat” to cut jobs at a plant that is not yet operational. Ford has not made a final decision on the investment in the plant and cited multiple considerations for the pause in construction. Ford had planned for the factory to start producing batteries in 2026.

While it is unclear whether the strikes influenced Ford’s decision, Sarah Lightner, a Republican State Representative, believes they may have played a role. However, automotive analyst Sam Abuelsamid suggests that opposition from people in the rural area of southern Michigan, who are unhappy with the presence of a Chinese company, may be a bigger factor. He also speculates that selecting a site closer to Detroit may have resulted in less opposition to the battery plant.

Ford’s decision to halt construction may indicate challenges in navigating the demands of the UAW and concerns about local opposition. The restructuring of the deal could help Ford take advantage of U.S. factory tax credits. The development of a U.S. supply chain for EV batteries aligns with the Biden administration’s goal of reducing reliance on foreign markets and promoting domestic manufacturing in the electric vehicle industry.

– Associated Press
– Guidehouse Insights