Ford Motor has announced the temporary pause of construction on a USD 3.5 billion electric vehicle (EV) battery plant in Michigan due to concerns about competitive operation amid ongoing contract negotiations. This decision has sparked criticism from the United Auto Workers (UAW) union.
Ford’s Concerns and UAW’s Response
Ford has cited uncertainties related to its ability to operate the plant competitively during contract negotiations as the reason for the pause. UAW President Shawn Fain criticized Ford’s move, viewing it as a threat to cut jobs. He emphasized the union’s request for a fair transition to electric vehicles (EVs) and accused Ford of prioritizing cost-cutting.
Ongoing Contract Talks
Ford has been actively negotiating with the UAW but has not yet reached an agreement. The fate of battery plant workers has been a central issue in these negotiations with the Detroit Three automakers.
Ford’s Statement and Biden’s Support
Ford stated that it is halting construction and limiting spending on the Marshall project but has not made a final decision on the planned investment. President Joe Biden is set to visit Michigan to show support for striking workers at the Detroit Three automakers.
Ford’s Battery Plant Plans
In February, Ford announced plans to build the battery plant in Michigan in collaboration with Chinese partner CATL. The goal was to produce batteries in the United States to attract U.S. customers with lower-cost EV technology. Michigan Governor Gretchen Whitmer expressed confidence that the pause is temporary and urged successful negotiations between the Big Three automakers and UAW.
Worker Wage Disputes
The UAW and some members of Congress have been advocating for equal wages at battery plants to match those at assembly and engine plants. This wage parity has been a contentious point in the discussions.
Congressional Concerns and Republican Response
Republican lawmakers have raised concerns about Ford’s battery plant deal, fearing it could facilitate U.S. tax subsidies to China and create dependency on Chinese technology. Representative Mike Gallagher, chair of a House select committee on China, encouraged Ford to reevaluate its deal with CATL. He urged Ford to cancel the deal altogether.
Ford’s EV Projections
Ford had previously projected a full-year loss of $4.5 billion in its EV unit, a 50% increase from earlier estimates. The company also announced a slowdown in its EV production ramp-up and plans to quadruple sales of gas-electric hybrids in the next five years.
EV Tax Credit Regulations
Automakers are closely monitoring new regulations concerning future EV tax credits as they make investment decisions related to battery production for EVs. The $430 billion Inflation Reduction Act (IRA) passed by Congress in 2022 includes provisions that could affect future consumer EV tax credits based on battery components’ origin.
Ford’s Position on Tax Credits
Ford has been waiting for guidance to determine if batteries produced by the Marshall plant would meet the regulatory requirements. The company has encouraged a narrow interpretation of the restriction to prevent restrictions on clean vehicle credits.
Michigan State Incentives
Questions have also arisen regarding the $1.7 billion in planned state incentives for the Marshall plant, which Ford expects to employ 2,500 workers. Some Michigan Republicans have voiced concerns about these incentives.
As negotiations continue and regulatory matters are clarified, the fate of Ford’s battery plant and its role in the transition to EVs remains uncertain.