Ford Scales Back Plans for $3.5 Billion EV Battery Plant, Cutting 800 Jobs

Ford Motor Co. on Tuesday said it would scale back its planned $3.5 billion battery plant in Michigan as consumer demand for electric vehicles weakens and labor costs grow.

The Marshall, Michigan, battery plant was initially announced in February by CEO Jim Farley and Chairman Bill Ford. At the time, the company estimated that the facility would create 2,500 jobs when it opened in 2026.

However, Ford said Tuesday it was cutting 800 jobs from its expectations and cutting production capacity by roughly 43%. The automaker did not reveal how its investment in the facility would be affected.

The reductions are part of Ford's plans to slash or delay roughly $12 billion in EV-related investments. The automaker has already halted construction on a $5.8 billion EV battery factory in Kentucky, which was set to begin production in 2025, and had previously paused work on the Michigan plant after the United Auto Workers went on strike.

“We looked at all the factors. Those included demand and the expected growth for EVs, our business plans, our product cycle plans, the affordability and business to make sure we have we can make a sustainable business out of this plant,” Ford Chief Communications Officer Mark Truby said during a media briefing on Tuesday, according to CNBC.

The company also considered labor costs when it made the decision, Truby said. Ford CFO John Lawler told investors last month labor costs will increase by roughly $850 to $900 per vehicle due to the now-ratified labor agreement with the UAW.

Ford has also been worried about slowing consumer demand for EVs; the company has said that many of its North American customers are unable or unwilling to purchase or unable to afford their vehicles, despite their interest in the vehicles.

“We’re still very bullish on EVs and our EV strategy, but clearly, while there is growth, both in the U.S. and worldwide, clearly, the growth isn’t at the rate that that we and others had expected,” Truby said. “We’re trying to be smart about this and how we move forward.”

The Michigan plant has also been a source of political controversy due to its ties with Chinese battery maker Contemporary Amperex Technology Co.,  which is the world's largest maker of electric batteries. Although the plant is entirely owned by Ford as a subsidiary, the automaker is licensing technology from CATL to produce new lithium iron phosphate — LFP —batteries.

When the plant finishes construction, Ford is expected to become the first company in the U.S. to make LFP batteries, which the company exempts will lower costs and raise profit margins.