Ford pauses work on $3.5bn EV battery plant in Michigan

Receive free Ford Motor Co updates

We’ll send you a myFT Daily Digest email rounding up the latest Ford Motor Co news every morning.

Ford is pausing construction on a $3.5bn plant in Michigan where it planned to make batteries for electric vehicles using technology from a Chinese company, amid controversy over the plan and an ongoing auto workers’ strike.

The Dearborn, Michigan carmaker on Monday said it would halt work and limit spending on construction for the plant, where it intended to build batteries made with licensed technology from Contemporary Amperex Technology, or CATL, the world’s largest battery maker for EVs.

Ford said the stop would remain in place until it was sure it could operate the plant competitively, with no final decision yet about whether to follow through with the planned investment.

“There are a number of considerations,” Ford said. “We’re not being specific about what they are. There is no change in our intention to be among the smaller number of companies leading the EV transition.”

The move comes as members of the United Auto Workers union continue to strike at the three major US carmakers, including Ford. UAW president Shawn Fain called it “a shameful, barely veiled threat by Ford to cut jobs. Closing 65 plants over the last 20 years wasn’t enough, now they want to threaten us with closing plants that aren’t even open yet.”

The move was first reported by The Detroit News.

The deal announced in February between Ford and CATL has drawn criticism from Republican lawmakers for what US Senator Marco Rubio described as bringing “America’s greatest geopolitical adversary into the heartland”. The pause comes as President Joe Biden, as well as Donald Trump, the former president and current frontrunner for the Republican presidential nomination, prepare to visit the picket line this week for the UAW strike against Ford, General Motors and Stellantis.

The plant was scheduled to open in three years and employ 2,500 workers. The batteries would use an alternate chemistry from the nickel-rich batteries that currently dominate the US market — and while CATL’s lithium iron phosphate batteries cannot go as far on a single charge, they cost less.

The licensing agreement with CATL differed from other deals struck between US carmakers and battery makers, which largely have been joint ventures. Instead, Ford planned to fully own the factory, a move that seemed aimed at minimising political blowback as US-China relations have deteriorated.

Although Ford said it will lose $4.5bn on its EV business this year, EVs are widely considered the future of the auto industry. States and municipalities are competing to win battery and EV assembly plants, with the thinking that auto industry jobs in the EV era will offer the high wages and steady employment that they did in the 20th century.

But the industry’s electrification is part of what is driving the UAW’s strike against the Detroit carmakers. The union is worried the change in technology could lead to job losses because EVs require fewer parts than petrol-powered cars. Moreover, jobs at non-unionised battery plants tend to pay less than unionised jobs.

The UAW on Friday said it had made more progress with Ford than its competitors, but the pause on the battery plant appeared to have undercut any goodwill between union and carmaker.

“We are simply asking for a just transition to electric vehicles, and Ford is instead doubling down on their race to the bottom,” Fain said.