Ford Battery Factory In Michigan Fights For Survival

The US auto industry has factories in California, Nevada, South Carolina, Georgia, Alabama, Tennessee, Kentucky, West Virginia, and Ohio, but its spiritual home has always been in Michigan where Ford, General Motors, and Chrysler have had their headquarters for a century or more. There’s a reason why Detroit is known as Motor City. As the EV revolution lurches forward, the battery factories that will supply the electric cars of the future — and employ thousands of American workers — are being built in Michigan because that’s where there customers are located.

However, the virulent opposition to electric vehicles by the current administration is putting political pressure on those battery factories in a way that was simply unimaginable a few short years ago. The Biden administration tore a page from the conservative playbook when it created the Inflation Reduction Act in 2022. Conservatives loathe mandates, so the Biden team loaded the law with manufacturing incentives — financial rewards designed to encourage companies to build the battery factories America would need to make more affordable electric cars and trucks.

There were no sticks in the IRA. Despite all the rending of garments and gnashing of teeth about mandates and government overreach, it simply said if companies wanted to build battery factories, they would be eligible for certain financial incentives. This has been standard procedure for both the federal, state, and local governments for decades. If you want something done, make it financially attractive to do so and it will get done.

But instead of saying thank you for adopting ideas from the conservative playbook, Republicans reacted with uncontrolled fury. How dare the mean Democrats steal our ideas and use them against us! Politics is a strange sort of Alice in Wonderland world where up is down and black is white. And when the Republicans returned to power in the last election, they looked at what the Democrats had done and shouted “Off With Their Heads!”

Ford Battery Factory In Marshall, Michigan, In Jeopardy

Ford is working diligently to construct a new battery factory in Marshall, Michigan. That facility will manufacture LFP cells, a first for Ford and arguably a key step forward for the Blue Oval brand, one that will make it possible to lower the cost of its future electric cars. The nearly one-mile-long factory is about 60 percent complete and is already manufacturing prototype battery cells that will be used to validate their performance.

But whether that factory ever gets completed is up in the air at the moment. Those incentives and production credits are in danger of being revoked by the Big Beautiful Bill working its way through the US Congress like a mongoose inside a python. Ford is facing a double whammy. Not only is the wrecking crew in charge of Congress determined to repeal every jot and tittle of the IRA, there is strong anti-China sentiment throughout the Republican Party.

That’s a problem because CATL, the Chinese company that is the largest battery manufacturer in the world, is Ford’s partner in the Marshall battery factory. CATL is the acknowledged leader in LFP battery technology (BYD is close behind), but having its name on the factory building would raise too many concerns for people both locally and nationally. So Ford came up with an ingenious plan.

Rather than a traditional partnership with CATL, it created a unique business arrangement whereby it would own the land, the building, and the production machinery. Then it would licence the battery manufacturing technology from CATL, which would train the original staff, then decamp back to China. In exchange, Ford would pay a royalty to CATL for each battery cell produced. Ford hoped it would be a model for bringing Chinese battery technology to America, and, in fact, according to Bloomberg, Tesla later struck a similar deal with CATL to manufacture LFP cells for energy storage.

Ford originally proposed to build the factory in Virginia, but its governor, Glenn Youngkin — who had some thoughts about maybe running for president one day — decided to beat his breast in front of the cameras and declare that Virginia didn’t need the jobs the factory would bring and that Virginia didn’t want no stinking Chinese corporations doing business within its borders. So Ford and CATL did a quick huddle and decided Michigan was the place for them to build their new battery factory.

A Charm Offensive

Now Ford is in the middle of a charm offensive designed to keep Congress from changing the rules of the game to the point that the battery factory in Marshall, Michigan, might no longer be financial viable. This past week, it invited key legislators to Marshall to view the factory and satisfy themselves there were no scary yellow-skinned people lurking about. Lisa Drake, Ford’s VP of Technology Platform Programs and EV Systems, led the lawmakers through the factory and summarized online what she told them during the tour:

This facility represents a historic step. An American automotive company is manufacturing — without relying on a foreign joint venture — LFP battery cells and battery packs domestically with American workers for American-assembled next-generation electric vehicles. We remain on track to start production of these prismatic LFP batteries next year.

Our ambition for vertical integration in the right places within our battery supply chain remains a key priority and is critical for future success. The scale of the facility is also key to unlock the cost benefits. We are bringing home to the U.S. the innovation that escaped our industry decades ago, and the result is we will not have to rely on imports in a continually changing global trade environment.

To really deliver truly affordable electric vehicles to our customers, we made a decision years ago to fully invest in a new facility with world-class LFP production technology installed in the U.S. for the first time — wholly owned and operated by Ford. This allows us to integrate cutting-edge innovation while building expertise and retaining control that will lay the foundation for future battery manufacturing in the U.S. — allowing the U.S. to finally build LFP batteries at scale and pave the way to compete globally on energy storage production.

Ford has invested $3 billion in BlueOval Battery Park Michigan. We’re excited that we will welcome around 1,700 people to this team — American jobs in the heart of Michigan.

A Disappearing US Auto Industry

Wow! That is powerful stuff, and it should have a significant effect on any legislator actually concerned about making America great again instead of sucking up to the putrid potentate in the Offal Office. Will the tour change any minds? Based on the virulence of the current mood in Washington, that’s doubtful, which could leave Ford scrambling to replace the $2.3 billion in federal incentives it expected to receive between 2026 and 2029. “I really feel bad for the automakers. I never thought I’d say that,” Sam Adham, the head of battery materials at consultancy CRU Group, told Bloomberg. “Everywhere they turn, there’s a sort of a roadblock.”

Bob Lee, president of LG Energy Solution in North America, told Gabrielle Coppola of Bloomberg, “This whole momentum behind creating an important industry will suffer” if Congress pulls the rug out from under the industries that made important business decisions in good faith based on the benefits promised by the IRA. He worries that if another swing of the pendulum on industrial policy forces Detroit to put off the hard work of making affordable EVs profitably, it won’t get another shot to compete with China’s state-backed juggernauts. “If we can’t sell cars anywhere else, that’s a dangerous place to be. We’re fast getting to that point,” he said.

Will Congress tear up the IRA just to score political points? If it does, few will be surprised. The whole MAGA nonsense is about scoring political points. Why would anyone expect them to suddenly start being rational?