"We are pleased to confirm we are moving ahead with the Marshall project, consistent with the Ford+ plan for growth and value creation. We have been evaluating BlueOval Battery Park Michigan in Marshall," Ford said. "While we remain bullish on our long-term strategy for electric vehicles, we are re-timing and resizing some investments." The said project was paused two months ago, with Ford citing issues on the site's future economic viability as it was losing billions of dollars due to the current financial downturn worldwide and slow adoption of EVs in the United States. (Related: Ford pauses construction of $3.5 billion EV battery plant in Michigan amid scrutiny over CCP involvement with the project.)
It indicated it is "right-sizing" while balancing investment, growth and profitability. The facility will now create more than 1,700 "good-paying American jobs" to produce a planned capacity of approximately 20 gigawatt hours (GWh), it claimed. The company also intends to use less space at the site, which currently comprises hundreds of acres just west of Marshall, a small town that's about 35 miles east of Kalamazoo.
Ford Motor said Tuesday that it was resuming work on an electric vehicle battery plant in Michigan but significantly scaling back its plans in part because of slow EV adoption in the United States. https://t.co/nPaUGJEiXS
— NYTimes Tech (@nytimestech) November 22, 2023
Back in February, Ford CEO Jim Farley announced that they would be collaborating with China-based company Contemporary Amperex Technology to construct the said electric-vehicle battery plant, which is to be Ford's first battery plant of its kind to enter operations, scheduled to open in 2026. Once it is operational, it will manufacture lithium-iron phosphate batteries.
The announcement of resumption is said to be a big shift from the promised 2,500 jobs and $3.5 billion investment revealed earlier this year by the car brand and Michigan Gov. Gretchen Whitmer. "Today's generational investment by an iconic American company will uplift local families, small businesses and the entire community and help our state continue leading the future of mobility and electrification," Whitmer said at the time. "Let's continue bringing the supply chain of electric vehicles, chips and batteries home while creating thousands of good-paying jobs and revitalizing every region of our state."
Ford spokesman Mark Truby acknowledged that the company's cuts almost certainly mean the state will reduce the roughly $1.8 billion promised in taxpayer subsidies for the megadevelopment. "I think we're all aware EV adoption is growing, and we expect that to continue, actually. But it's not growing at the pace that I think ourselves and the industry had expected," Truby said. "We want to be really disciplined about how we allocate capital and think about matching production and future capacity based on demand."
For Michigan State House Republican Leader Matt Hall, the bad deal the governor and Democrats negotiated for Michigan taxpayers just got a whole lot worse. "Even with Democrats' premature push for electric vehicles and $1.8 billion in state incentives, Ford is cutting back the project and slashing job creation because most people just won't buy unaffordable, inconvenient EVs," he pointed out.
Car giants admit "weak" demand for electric cars
Top executives of some of the largest car manufacturing corporations, including Ford, General Motors (GM) and Mercedes-Benz, admit sales losses amid soaring prices of "robo cars." Back in October, Ford's Farley withdrew its full-year results forecast, citing "uncertainty" over its tentative deal with the United Auto Workers and warned of continued pressure on EVs as customers balk at paying a premium for them over other models.
"It's been a challenging situation, for sure," he said during the company's third-quarter earnings call after posting greater losses than expected on EVs. "Matter of fact, our business is never short of challenges, especially right now with the evolution of the EV market and new global competitors from China, as well as the technology disruptions." He claimed that having great products is not enough in the industry anymore as there is weight in offering competitive costs for consumers, "affordability is an issue."
Moreover, GM CEO Mary Barra also withdrew its 2023 profit outlook, saying the brand will slow the launch of several planned EV models to cut costs. She said that they are reducing fixed costs by $2 billion net of depreciation and amortization before 2024 ends. Barra wrote in a letter to shareholders: "We are also moderating the acceleration of EV production in North America to protect our pricing, adjust to slower near-term growth in demand and implement engineering efficiency and other improvements that will make our vehicles less expensive to produce and more profitable." The car company and Honda, one year after its launch, also announced the ending of a $5 billion partnership to develop affordable EVs. GM also postponed the $4 billion electric truck plant in Michigan.
Meanwhile, Mercedes-Benz reported that its third-quarter earnings fell as margins on EVs remained lower than previously assumed. Its financial chief Harald Wilhelm noted during a call with analysts that some traditional players are selling EVs below the pricing level of internal combustion engine vehicles despite their higher production costs.
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