DETROIT – Ford Motor is scaling back plans for a $3.5 billion battery plant in Michigan as consumers shift to electric vehicles more slowly than expected, labor costs rise and the company moves to cut costs.
Ford executives including CEO Jim Farley and Chair Bill Ford initially announced the facility in February. It quickly became a political target due to its connection to Chinese battery manufacturer Contemporary Amperex Technology Co., or CATL. The plant is a wholly owned Ford subsidiary, but the U.S. automaker is licensing technology from CATL to produce new lithium iron phosphate, or LFP, batteries for EVs.
Ford said Tuesday it is cutting production capacity by roughly 43% to 20 gigawatt hours per year and reducing expected employment from 2,500 jobs to 1,700 jobs. The company declined to disclose how much less it would invest in the plant. Based on the reduced capacity, it would still be about a $2 billion investment.
The decision adds to a recent retreat from EVs by automakers globally. Demand for the vehicles is lower than expected due to higher costs and challenges with supply chains and battery technologies, among other issues.