Ford Pumps Brakes on its $3.5B EV Battery Plant in Michigan
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On September 25, Ford Motor Company (F:US) dropped a bombshell - the temporary suspension of construction on its $3.5 billion electric vehicle (EV) battery plant in Marshall, Michigan. The reason behind this pause centers on concerns about the automaker's competitive capability in managing the facility.
This announcement comes in the midst of ongoing negotiations between Ford and the United Auto Workers (UAW) union. Despite Ford's repeated offers, a deal has remained elusive, drawing the attention of President Joe Biden, who plans to visit Michigan in support of striking UAW workers at the Detroit Three automakers.
Furthermore, Republican members of Congress have been closely monitoring Ford's battery plant project, particularly due to its collaboration with CATL, the world's largest battery manufacturer, based in China. Worries have arisen that this partnership might divert U.S. tax subsidies to China and potentially make Ford reliant on Chinese technology.
Ford, though not providing specific reasons, has stated, "We are pausing work and limiting spending on construction on the Marshall project until we’re confident about our ability to competitively operate the plant. We haven’t made any final decision about the planned investment there."
This development follows Ford's earlier announcement in July, where they forecasted a full-year loss of $4.5 billion for their electric vehicle unit, a figure 50% higher than prior projections. Concurrently, Ford unveiled plans to slow down its EV production ramp-up while aiming to quadruple sales of gas-electric hybrids over the next five years.
The automotive industry is closely tracking new regulations concerning future EV tax credits, which will significantly impact automakers' decisions regarding battery production amid the ongoing shift towards electric vehicles. Notably, in 2022, Congress passed the $430 billion Inflation Reduction Act, which stipulates the forfeiture of $7,500 in future consumer EV tax credits if any battery components are manufactured or assembled by a "foreign entity of concern".
In parallel, Senator Tommy Tuberville disclosed selling Ford shares valued between $100,000 to $250,000 in August, while Representative Earl Blumenauer similarly divested shares worth $15,000 to $50,000 in August.
Despite these challenges, Ford's stock has displayed resilience, surging by an impressive 9.30% over the past six months.
