Ford pauses construction of $3.5 billion EV battery plant in Michigan

Detroit automaker Ford halted construction of a $3.5 billion EV battery plant in Marshall, Michigan, on September 25 amidst months of disputes with locals, Republicans in Congress over its intended use of Chinese technology, and a strike by the auto industry- now in its second week.

The automaker said, “We are pausing work and limiting spending on construction on the Marshall project until we are confident about our ability to operate the plant competitively.” Ford would not specify what precisely led to the decision but added that there were various factors.

While the fate of battery factory workers has remained a crucial concern in negotiations with the Detroit Three, Ford has repeatedly increased its offer to the union without achieving a settlement.

Meanwhile, Shawn Fain, president of the United Auto Workers (UAW), criticized Ford, calling the announcement “a shameful, barely-veiled threat by Ford to cut jobs. We are only asking for a just transition to electric vehicles, and Ford is instead doubling down on their race to the bottom.”

It’s important to note that the battery facility in Marshall was one of four cornerstone projects around which state lawmakers and Gov. Gretchen Whitmer in 2021 constructed the Strategic Outreach and Attraction Reserve (SOAR) fund to ensure job creation.

Furthermore, Republicans in Congress have been investigating Ford’s plans for a battery plant over concerns that they would make it easier for China to receive tax breaks from the U.S., thus rendering Ford more reliant on Chinese technology.

Republican Congressman Mike Gallagher, the head of a House select committee investigating China, stated that lawmakers were “Encouraged to see Ford take a crucial first step to reevaluate its deal” with CATL. He continued, “Ford now needs to end this deal permanently.”

As manufacturers decide whether to invest in the production of batteries for the transition to EVs, the industry is watching how new regulations for future EV tax incentives will be implemented. Additionally, Ford has been awaiting clarification to determine if the batteries run by the Marshall plant would violate those rules.

The company urged the Treasury to interpret the restriction strictly, stating, “An overly expansive interpretation of this provision runs the risk of making the clean vehicle credit largely unavailable.” Nevertheless, Michigan Republicans have questioned the $1.7 billion in state subsidies planned for the Marshall facility, which Ford claims will employ 2,500 people.

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