Ford’s incentives for electric car plant in Michigan will be halved

Ford will receive significantly less public support for its new electric car battery plant in Michigan. Ford’s funding for the plant has been cut by more than half, in line with the automaker’s recent plans to reduce production.

Screw back

The Michigan Strategic Fund approved the cut on Tuesday. Ford will now receive $409.1 million in funding from Michigan, less than half of the $1.03 billion originally expected.

Ford announced last November that it would “downsize” some of its electric vehicle investments, including its new electric vehicle battery plant (BlueOval Battery Park) in Michigan. Plans call for reducing investment in the project from $3.5 billion to between $2.5 billion and $3 billion.

The planned annual capacity of the plant is 35 GWh. This will now be reduced by over 40 percent to around 20 GWh.

Ford’s electric vehicle battery manufacturing facility is expected to produce enough LFP batteries for about 230,000 electric vehicles per year (up from 400,000).

In addition, the number of new jobs created at the site was reduced from 2,500 to around 1,700 to 2,000.

Ford announced that the 160,000-square-foot facility is 20 percent complete and production is scheduled to begin in 2026. The batteries will be used to power Ford’s next-generation electric vehicles.

Ford’s incentives to be reduced as part of new electric car plans in Michigan

Lisa Drake, vice president of EV programs and energy supply chain at Ford, said, “BlueOval Battery Park Michigan will play an important role in our plan to make electric vehicles more accessible and affordable by producing low-cost LFP batteries in the U.S. rather than relying on imports.”

The project is facing opposition because Ford plans to acquire a technology license from Chinese company CATL to produce low-cost LFP batteries for electric vehicles.

Ford expects the facility to benefit from incentives under the Inflation Reduction Act, including the Advanced Manufacturing Technology Production Tax Credit.

The American automaker is moving away from larger vehicles and focusing on smaller, more profitable electric vehicles.

Michigan is also cutting off a $100.8 million grant starting in 2022 after Ford missed its targets for job creation and investment at its Rouge EV Center. In April, Ford laid off a third of the 2,100 workers at the plant. Ford said the move was due to “slower than expected” demand.

Tony Reinhardt, Ford’s director of state and local government affairs, said the company is “flexibly adjusting” its production plans to meet customer demand. He added: “The Michigan Strategic Fund board is revising its incentive offers accordingly.”

Ford said in a statement Tuesday that its electric car projects in Michigan will still create or retain over 5,000 jobs. The automaker currently employs over 44,000 people in the state.

Despite the decline, Ford remained the second-best-selling electric car brand in the U.S. behind Tesla through the first half of 2024. Ford’s electric car sales rose 61% in the second quarter, with nearly 24,000 models sold.

To keep the momentum going, the F-150 Lightning and Mustang Mach-E are featured in Ford’s new summer savings event (you can check out the deals here).

Source: CrainsDetroit, Ford