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Ford details $3.5 billion electric vehicle battery plant to be built in Marshall

Posted By: The Detroit News on February 13, 2023.  For more information, please click here to read the source article.

With a single multi-billion-dollar battery investment, Ford Motor Co. is signaling that Michigan will play a central role in the Dearborn automaker’s bid to secure its electric-vehicle supply chain and ramp up EV production.

The Blue Oval confirmed plans Monday to invest $3.5 billion to build the first automaker-backed lithium iron phosphate battery plant in the United States. The venture, slated to come online in 2026, will initially create 2,500 jobs. The plant, as The Detroit News previously reported, will be built on the Marshall Megasite in Calhoun County.

BlueOval Battery Park Michigan, which Ford said could be expanded in the future, will be a wholly-owned Ford subsidiary. Ford will own and operate the plant and employ the workforce. It will license battery cell technology from China-based Contemporary Amperex Technology Co. Ltd., or CATL, the world’s leading EV battery maker, and tap the company for additional services tied to LFP manufacturing.

“We are committed to leading the electric vehicle revolution in America, and that means investing in the technology and jobs that will keep us on the cutting edge of this global transformation in our industry,” Executive Chair Bill Ford said in a statement. “I am also proud that we chose our home state of Michigan for this critical battery production hub.”

Ford CEO Jim Farley said executives considered numerous other sites, both inside and outside North America, but ultimately the Marshall Megasite was the “hands down winner.”

“Landing this investment will continue bringing the supply chain of electric-vehicle batteries home to Michigan, and will make sure that production lines aren’t stalled by global shocks,” Michigan Gov. Gretchen Whitmer said at a news conference at Ford’s Ion Battery Park. “We’re competing, and Michigan is winning against other states and nations because of our deep manufacturing roots, our tough, talented workers and willingness to work with anyone who wants to get things done.”

To land the project, state economic development officials assembled an incentive package totaling slightly more than $1 billion, including a $210 million grant from the state’s critical Industry Program and a designated renaissance zone worth $772 million that would reduce real and personal property taxes over the next 15 years.

The $210 million will come from the state’s Strategic Outreach and Attraction Reserve fund. The Michigan Strategic Fund board also approved a request from the Marshall Area Economic Development Alliance, or MAEDA, for a $36 million Michigan Investment Fund MSF Loan to “purchase, improve and convey” Marshall site parcels in and around Calhoun County.

The Marshall plant will be the fourth battery plant Ford is building in the United States. The company is building two in Kentucky and one in Tennessee. Those plants, however, are joint ventures with South Korean partner SK On.

The Marshall plant’s ownership structure is good news for the United Auto Workers, said UAW President Ray Curry, expressing confidence the union will represent workers there: “Ford wholly owning this property makes a big difference because now we’re talking about the OEM as the employer and not a separate joint venture.”

Chuck Browning, UAW vice president and director of the union’s Ford department, noted in a statement that UAW Local 600 members who build the F-150 Lightning at the Rouge Electric Vehicle Center in Dearborn will begin installing LFP batteries in the Lightning next year: “Because of the foresight of collective bargaining,” he added, “the UAW will be able to organize this new facility using a card check to prove majority interest.”

The plant will add about 35 gigawatt hours of annual battery capacity to Ford’s operations. That’s enough to power approximately 400,000 EVs per year. The battery cells produced there will power “a variety of Ford’s next-generation of EV passenger vehicles and pickups” that are under development, Ford said.

The automaker touted the project as a way to diversify the capabilities within its EV lineup by adding a second battery chemistry to its existing use of nickel cobalt manganese, or NCM, batteries. Executives said the move to add LFP batteries to Ford’s EV portfolio would help the company scale up EV production, hit its target of an 8% operating profit margin for its EV business by 2026, and give customers more choices to meet their individual needs.

Ford also touted the cost-savings potential of LFP batteries, saying the chemistry is less expensive. It also expects to save on shipping and import costs, and said it will benefit from the Biden administration’s Inflation Reduction Act, or IRA, which incentivizes domestic production of EVs and batteries.

“The whole point of this project is to lower the cost of EVs, so that normal people can buy them,” Farley said.

LFP batteries are known for being durable. Using them also means less reliance on in-demand, costly materials such as nickel and cobalt. Ford plans to introduce LFP batteries on the Mustang Mach-E this year and on the F-150 Lightning in 2024 under a supply agreement with CATL ahead of the Marshall plant’s opening.

“We have a low-cost chemistry with LFP. Vertically integrated efficiency. Domestic production, which eliminates unnecessary freight and duty. Plus 100% production tax credits flowing through,” said Lisa Drake, Ford Model e’s vice president of EV industrialization. “This is how we look at the recipe to create one of the lowest-cost U.S.-produced batteries when this plant comes online in ’26.”

“This is a victory,” Quentin Messer, CEO of the Michigan Economic Development Corp., told The News. “Once the IRA passed, it became pretty clear they were going to invest in the United States. That central piece of legislation at the federal level certainly helped.”

Ford is investing $50 billion in electrification through 2026 as it targets global EV production of 600,000 units annually by the end of this year and 2 million units annually by 2026. The company ended 2022 as the No. 2 EV maker in the U.S. behind market leader Tesla Inc.

Currently, the automaker predominantly uses NCM batteries in its vehicles. That chemistry has the advantage of having high energy density. It bolsters range and performs well in low temperatures, making it a good fit for customers who use their vehicles for towing and hauling.

LFP batteries, executives said, may be beneficial to customers who consistently drive shorter, predictable routes, because the technology is durable and enables frequent, higher-speed charging.

LFP batteries may be a good fit for many of Ford’s existing EV customers. Executives reported that the median daily distance driven by Mach-E owners is about 32 miles, with a median trip distance of about 5 miles. For the F-150 Lighting, customers’ median daily distance is 28 miles.

Michigan emerged as the winner for the project after Virginia Gov. Glenn Youngkin, a Republican and possible 2024 presidential candidate, in December said he pulled Virginia out of consideration for the project due to his objections over the involvement of a Chinese partner and its alleged ties to China’s ruling communist party. Some Michigan Republicans have expressed concerns about CATL’s role in the project.

Asked about the potential political risks of using a Chinese company’s technology, Drake pointed out that CATL’s LFP batteries are in the U.S. today, including in Tesla vehicles — but they’re all imported. And Farley held up the project as a prime example of the IRA’s intent to spur the buildout of domestic supply chains.

“This project is aimed at de-risking that by actually building out the capacity and the capability to scale this technology in the United States,” said Drake, “where Ford has control — control over the manufacturing, control over the production, control over the workforce.”