Ford Motor Co. is investing $3.5 billion in an electric vehicle battery plant in southwest Michigan that will operate with technology and support from a Chinese battery maker that has sparked political controversy.
The plant near Marshall, Michigan, will employ 2,500 workers, Ford said Friday, confirming a February 10 Bloomberg report. The facility opens in 2026 and will produce enough batteries for 400,000 EVs a year.
The US automaker will contract battery know-how from China Contemporary Amperex Technology Co. Ltd, which will help set up the factory and have staff there. Ford said it would own and operate the plant and create a wholly-owned subsidiary to run it.
“Ford has control – manufacturing control, production control, labor control,” Lisa Drake, Ford’s vice president of EV industrialization, said in a briefing with reporters. “We license that technology from CATL.”
The arrangement, aimed at securing tax benefits for the plant, has drawn criticism amid growing geopolitical tensions between the US and China. Virginia Governor Glenn Youngkin withdrew the state from consideration as a location for the plant, calling it a “Trojan horse” for the Chinese Communist Party.
CATL staff will help with the installation of factory equipment to build batteries, some of which will come from China, Drake said. And some personnel from CATL will remain at the Michigan plant permanently because “we need help,” Drake said.
The United Auto Workers said it had a claim that the plant would create “good union jobs.”
At a ceremony Monday in Michigan to announce the plant, Chief Executive Bill Ford, great-grandson of founder Henry Ford, described the company’s relationship with the Chinese battery maker as a way to promote American autonomy in building EV batteries, which currently come from Asia.
“Producing these batteries in America will bring us closer to battery independence,” Ford said. CATL will “help us accelerate so that we can make our own batteries.”
Provide technology
CATL, the world’s largest battery maker, provides the technology for lithium iron phosphate batteries, which are cheaper and will make Ford’s EV lineup more affordable, Drake said. The plant will be the first in the U.S. to produce a battery called LFP.
Ford will begin offering LFP batteries in the Mustang Mach-E model later this year and in the F-150 Lightning plug-in pickup truck next year. Initially, the batteries will be imported from China. Tesla Inc. and Honda Motor Co. also has a contract with CATL to import LFP batteries for EV models.
The Michigan plant will have an annual capacity to produce 35 gigawatt hours of LFP batteries, which is enough to provide power for 400,000 Ford models a year, said Drake. This will represent about one-fifth of Ford’s targeted EV output of 2 million vehicles annually by the end of 2026. Ford is spending $50 billion to develop and build EVs through 2026.
By providing more electric lineups with more affordable batteries, that will help automakers achieve the sales volume needed to reach their target of an 8% earnings margin before interest and taxes on EVs by 2026, Drake said.
Ford is currently losing money on its EV lineup, which helped contribute to disappointing earnings last year that may have led to job cuts.
Ford shares rose 2.4% at 2:26 pm in New York. The stock is up 9.5% this year through Friday’s close.
Tax Credit
Ford believes that the batteries produced at the factory will qualify for full production tax credits under the Inflation Reduction Act passed by Congress last year that seeks to encourage domestic production of EVs and batteries.
However, consumers who buy a Ford EV with a battery manufactured at a Michigan plant will not get the full $7,500 in tax credits, according to Marin Gjaja, head of sales and marketing for Ford’s EV business. However, they will get a $3,750 credit because the vehicle is built in the US, but the battery materials are not locally sourced. Commercial customers and lessors will get a $7,500 tax credit, Gjaja said.
“I think over time we will see that we will qualify for the full $7,500 based on mineral resources and that is something that the team continues to work on,” Gjaja told reporters.
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