Ford announced on Tuesday its decision to downsize its plans for a factory in Michigan that was intended to produce cheaper lithium iron phosphate batteries for electric vehicles. This comes in the wake of a pause in the project two months ago and aligns with Ford’s strategy to delay around $12 billion in investments for electric vehicles, including the construction of a second battery plant with SK On, its joint venture partner.
Ford’s decision to downsize its EV battery factory plan reflects the slower growth in electric vehicle sales and increased price sensitivity among consumers. Despite the reduction in production capacity and job estimates, Ford remains committed to its long-term electric vehicle strategy and will continue to invest in the EV battery park project in Michigan.
Adjustments Due to Slowed EV Sales and Increased Price Sensitivity
Like many other automakers, Ford has made adjustments to production timelines and factory plans due to slower growth in electric vehicle sales and increased price sensitivity among consumers. By scaling down the EV battery factory, Ford aims to adapt to the changing market conditions and optimize its investment strategy.
Reduced Production Capacity and Job Estimates
The scaled-down version of the EV battery factory will now have a production capacity of 20 gigawatt-hours, reflecting a significant reduction of approximately 43%. Despite the downsizing, the factory is still scheduled to commence battery cell production in 2026. However, the number of jobs estimated to be created by the factory has decreased from 2,500 to 1,700.
Continued Investment in Electric Vehicle Strategy
Ford remains optimistic about its long-term strategy for electric vehicles but recognizes the need to re-evaluate and resize certain investments. The company stated, “While we remain bullish on our long-term strategy for electric vehicles, we are re-timing and resizing some investments.” Ford’s commitment to the EV battery park project in Michigan remains steadfast, albeit with adjustments to align with current market dynamics.