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Ford Restarts Production of Electric Vehicle Batteries in Michigan with Reduced Capacity

Ford Motor announced that it would resume work on an electric vehicle battery plant in Michigan but with a significant reduction in its plans due to slow E.V. adoption in the United States.

The company now expects the plant in Marshall, Mich., to create 1,700 jobs instead of the originally planned 2,500, with production still expected to begin in 2026.

According to a Ford spokesman, T.R. Reid, the demand for electric vehicles is not growing as expected. In response, the plant’s annual battery production will be reduced from 35 gigawatt-hours to 20 gigawatt hours, a 42.8 percent decrease.

Although Ford did not specify the exact amount of the reduction in investment, it is expected to be proportional to the decrease in output, potentially representing a $1.5 billion reduction from the initially announced investment of $3.5 billion.

In September, Ford had suspended construction due to concerns about competitiveness in manufacturing. This decision was partly influenced by labor costs, with Ford’s contract agreement with the United Automobile Workers union resulting in a 25 percent increase in the top wage for production workers.

The agreement also allows U.A.W. members to be transferred to battery and electric-vehicle plants under construction, such as the one in Marshall, with protection under the U.A.W.’s contract if they choose to unionize.

The U.A.W. is aiming to maintain its membership rates during the transition to electric vehicles, while automakers have expressed concerns about potential disadvantages compared to nonunionized competitors.

Ford has also received criticism from conservative lawmakers over its plan to license technology from CATL, a Chinese battery maker. There are uncertainties about whether U.S. companies licensing technology from other countries will qualify for government incentives to promote the shift from fossil fuels.

Moreover, it remains to be seen whether the technology licensing agreement for the plant will be eligible for government incentives. Despite these concerns, Ford expressed confidence in the technology licensing agreement for the plant.

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