Ford’s plans to build a new electric vehicle (EV) battery plant in Michigan are expected to receive significantly less government support. Ford’s incentives for the plant have been slashed by more than half, in line with the automaker’s recently announced cost-cutting measures.
Scaling again
The Michigan Strategic Fund authorized a discount on Tuesday. Ford will receive $409.1 million in incentives from Michigan, a significantly reduced amount compared to the initial $1.03 billion expected.
Ford announced a realignment of certain EV investment projects last November, including the construction of its new EV battery plant, BlueOval Battery Park, in Michigan. Plans now scale back investment levels in the challenge from $3.5 billion to a revised range of $2.5-3 billion, reflecting a significant decrease in financial commitments.
The planned solar facility was expected to generate approximately 35 gigawatt-hours (GWh) per year. The facility’s capacity is set to decrease by approximately 40%, reducing its output to around 20 gigawatt-hours.
Ford’s electric vehicle (EV) battery facility is expected to produce enough lithium-iron phosphate (LFP) batteries to support the manufacture of approximately 230,000 EVs annually, a decrease from the initial target of 400,000 vehicles per year.
The reduction in new jobs at the facility was substantial, decreasing from approximately 2,500 to a range of 1,700 to 2,000 positions.
Ford inaugurated a massive 1.8-million-square-foot facility, currently operating at just 20% capacity, with plans to begin production by 2026. Ford’s next-gen EVs may utilise the batteries.
Ford’s electric vehicle (EV) incentives are being scaled back as the company focuses on its new $7 billion investment in Michigan. The automaker is allocating funds for a new battery plant and upgrading facilities to support production of electric vehicles, which will lead to reduced incentives for customers.
Ford’s VP of EV Applications and Vitality Supply Chain, Lisa Drake, said, “The Blue Oval Battery Park in Michigan will be a crucial part of our strategy to make electric vehicles more accessible and affordable by producing low-cost lithium-iron phosphate (LFP) batteries domestically.” and never counting on imports.”
Pushback has emerged against the challenge as Ford prepares to licence technology from China’s Contemporary Amperex Technology Co. Limited (CATL) to provide affordable lithium-iron-phosphate (LFP) electric vehicle (EV) batteries.
Ford anticipates being able to leverage learnings from incentives provided by the Inflation Reduction Act, including the enhanced manufacturing production tax credit.
The American automaker is pivoting away from larger vehicles to focus on developing a range of smaller, more profitable electric vehicles (EVs).
Michigan stands to reduce its receipt of a $100.8 million grant issued in 2022 by a significant amount. By the end of April, Ford had reduced its workforce at the plant by one-third, letting go of approximately 700 employees out of a total of 2,100 staff members. Around 700 employees had been relocated to the company’s Michigan meeting plant, while another 700 either transitioned to new roles or took advantage of a special retirement incentive program. Ford attributed the transfer to a slower-than-expected uptick in demand.
According to Ford’s Director of State and Native Authorities Affairs, Tony Reinhart, the company is “rapidly adapting” its production strategies to align with shifting consumer demand. Accordingly, the Michigan Strategic Fund board is revising its incentives.
Ford announced on Tuesday that its electric vehicle initiatives in Michigan are expected to generate or preserve around 5,000 jobs. With a workforce of more than 44,000 employees based in the state, the automaker has expanded its operations significantly.
Despite a recent pullback, Ford persisted as the second most popular electric vehicle (EV) model in the United States, trailing only Tesla through the first half of 2024. Ford’s electric vehicle (EV) gross sales skyrocketed 61% in the second quarter, with nearly 24,000 models sold.
To sustain the energy gained, Ford is highlighting its F-150 Lightning and Mustang Mach-E in a new Summer Savings Event, where customers can view exclusive deals.
