The cutbacks are part of Ford’s retrenchment of its EV strategy, which includes delaying US$12bil in spending on battery-powered models. — Bloomberg
Detroit: Ford Motor Co is reducing capacity and hiring plans at a battery plant it’s building in Michigan because it sees weaker demand for electric vehicles (EVs).
The automaker said that it’s resuming construction of the Marshall factory that was paused two months ago, but it will now produce enough batteries to power about 230,000 EVs a year, down from a previous plan of 400,000.
Employment at the plant, due to open in 2026, will now be 1,700, according to a statement. It originally planned to hire 2,500 workers when it was announced in February.
The cutbacks are part of Ford’s retrenchment of its EV strategy, which includes delaying US$12bil in spending on battery-powered models.
Ford previously abandoned plans to build two million EVs annually by the end of 2026 and now won’t say when it expects to reach that milestone. Sales of its F-150 Lightning plug-in pickup – its signature EV – fell 46% in the third quarter.
EV adoption “is not growing at the pace that I think ourselves or the industry had expected,” Mark Truby, Ford’s chief communications officer, told reporters in a briefing. “We want to be really disciplined about how we allocate capital and think about matching production and future capacity based on demand.”
Truby said Ford’s total spending on the plant, which had been pegged at US$3.5bil, will drop by an amount equal to the capacity reduction, which would lower the investment to about US$2bil.
The automaker decided on the downsizing once it reached agreement on a new labour contract with the United Auto Workers union, which increased wages by 25% to US$42 an hour.
The Marshall plant is not yet organised by the UAW, but the union is expected to target the plant and get it under its master labour agreement.
“Labour cost was one of the factors we were looking at,” Truby said. “We now have some certainty there.”
The plant, which is wholly owned by Ford, will license technology from China’s Contemporary Amperex Technology Ltd Co (CATL).
Ford expects the batteries produced at the Marshall plant will qualify for subsidies under the Inflation Reduction Act (IRA), one of President Joe Biden’s signature pieces of environmental legislation.
“We’re confident in terms of the IRA benefits,” Truby said. “We believe bringing in a factory that’s a wholly owned Ford factory, setting up production in Michigan with CATL as a technology partner is a far better solution than importing batteries from Asia and overseas.” — Bloomberg
