Ford is planning to build a $3.5 billion electric vehicle battery factory in Michigan

Ford Motor Co. plans to build a $3.5 billion factory in Michigan that would employ at least 2,500 people to produce lower-cost batteries for a variety of new and existing electric vehicles.

The plant, to be built on land being prepared for industrial development about 100 miles west of Detroit, would begin manufacturing batteries in 2026. It would produce 35 gigawatt hours worth of batteries, enough to power 400,000 vehicles a year, Ford said.

The factory near the town of Marshall would make batteries using a lithium-iron-phosphate chemistry that is cheaper than the current nickel-cobalt-manganese chemistry now used in many EV batteries. Consumers could then choose between wanting the shorter-range, lower-cost battery, or paying more for higher range and performance. The company has not yet announced prices.

“The whole intention here is to make electric vehicles more affordable and accessible for customers,” said Marin Gjaja, Ford’s chief marketing officer for electric vehicles.

Ford says a wholly owned subsidiary would own the factory and employ the workers. But China’s Contemporary Amperex Technology Co. Limited, or CATL, known for its lithium iron phosphate expertise, would provide technology, some equipment and workers.

The announcement comes at a time when US-China relations are strained and the Biden administration is offering tax credits to companies to build a US supply chain for electric vehicle batteries. To offer customers a full $7,500 tax credit per vehicle, EV batteries must not contain any metals or components imported from China.

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Ford hopes the plant’s structure will ease criticism of spending state tax incentive money on a joint-venture factory owned by a Chinese company. Last month, the state of Virginia dropped out of the race for the same Ford plant after Gov. Glenn Youngkin described the project as a “front” for the Chinese Communist Party, which would raise national security concerns. At the time, Virginia Ford had not offered an incentive package.

The company anticipates taking advantage of US factory tax credits and that buyers would initially receive at least $3,750 in tax credits since the vehicles are produced in North America. Gjaja said they could receive the full $7,500 credit over time, dependent on battery mineral sourcing.

Lithium iron phosphate batteries would be installed in standard versions of Ford’s electric vehicles. For example, the most affordable Mustang Mach-E electric SUV would get an LFP battery and be able to travel 247 miles per charge. The long-distance version of the Mach-E will have nickel-cobalt-manganese chemistry, giving it 310 miles per charge.

The facility was unveiled Monday at a meeting of the Michigan Strategic Fund, which approved a major tax incentive package for the project near the intersection of Interstates 94 and 69.

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Gabby Bruno, Ford’s director of economic development, said there was “no lack of competition for this project”. She said Michigan “ran against numerous states and countries” to secure the investment.

About $210 million for the Ford plant came from Michigan’s Strategic Outreach and Attraction Reserve Fund, known as SOAR, which was set up to attract industry and jobs to the state. But the overall size of the stimulus package wasn’t clear.

The SOAR Fund has raised nearly $1.8 billion from the state’s general fund since its inception in December 2021.

A tax break bill passed in Michigan House last week could send up to $1.5 billion to the SOAR Fund over three fiscal years, in addition to a one-time $800 million contribution that Gov. Gretchen Whitmer announced last week outlined their budget proposal.

The tax break bill, which has yet to be approved by the state Senate where Democrats hold a two-seat majority, has been heavily criticized by Republicans for giving too little to taxpayers and too much to big corporations.

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