Ford plans to build a battery factory in Michigan to unlock EV tax credits

(CNN) Ford is investing $3.5 billion to build a battery factory in Michigan, a move that will help the automaker take advantage of more federal tax credits for electric vehicles.

The plant will operate as a wholly owned subsidiary of Ford Motor Co. but will build batteries using “knowledge” and services from Chinese company Contemporary Amperex Technology Co., or CATL, Ford said. CATL, the world’s largest battery maker, also supplies batteries to Tesla.

The facility will be built on a 950-acre site in southern Michigan near the town of Marshall. Ford says it will employ 2,500 people when production begins in 2026.

Congress passed the $430 billion Inflation Reduction (IRA) Act in August to restructure the electric vehicle tax credit. Under the new law, consumers who buy an electric vehicle are eligible for tax credits of varying amounts depending on whether the vehicle itself, its batteries and battery components were manufactured in the United States and the battery minerals were extracted.

The new LFP batteries are used in some versions of the Ford F-150 Lightning pickup.

Ford had considered locations outside of the United States for this battery plant but chose Michigan as a location in part because of tax credit rules, Lisa Drake, Ford’s vice president of EV industrialization, said at a news conference.

“I think the IRA was incredibly important to us and honestly it did what it was meant to do,” she said. “And it enabled the United States to capture 2,500 amazing engineering jobs and all the indirect jobs that come with them, as well as future growth.”

The plant will produce lithium iron phosphate batteries, better known as LFP (lithium ferrous phosphate) batteries. This is a type of battery that does not use nickel or cobalt, elements that are difficult and expensive to extract from the earth.

LFP batteries charge faster and last longer when frequently charged to their full capacity than the NCM or nickel, cobalt and manganese batteries currently used in Ford electric vehicles. However, NCM batteries can store more energy for a similar weight and perform better in cold temperatures and when towing heavier loads.

Later this year, Ford will begin offering the lower-cost LFP batteries on base-model versions of the Mustang Mach-E SUV and next year on some versions of the F-150 Lightning electric pickup. These batteries will initially be imported by CATL in China until the Michigan battery facility becomes operational.

The battery plant will be in addition to the plants in Kentucky and Tennessee that Ford has announced for 2021. Ford builds these plants with SK Innovations, a company based in South Korea. Ford has announced that it will be able to produce 2 million electric vehicles worldwide by the end of 2026.

In the short term, the company expects capacity to build 600,000 electric vehicles by the end of this year.

CNN’s Matt McFarland and Reuters contributed to this report.

Leave a Reply

Your email address will not be published. Required fields are marked *