Romulus — Ford Motor Co. signaled Monday that Michigan will play a central role in the Dearborn automaker’s bid to secure its electric-vehicle supply chain and diversify its battery technologies.
The Blue Oval confirmed plans to invest $3.5 billion to build the first automaker-backed lithium iron phosphate battery plant in the United States. Ford is doing so with Contemporary Amperex Technology Co. Ltd., or CATL, under a licensing agreement with the China-based company, the world’s leading battery manufacturer.
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 and will be called BlueOval Battery Park Michigan. It would be part of a wholly-owned Ford subsidiary and could be expanded in the future.
The Ford-owned subsidiary would manufacture the battery cells “using LFP battery cell knowledge and services provided by CATL,” according to Ford. 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.
“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.”
The complex will be the fourth battery plant Ford is building in the United States with battery manufacturers. The company also is building two battery plants in Kentucky and one in Tennessee with Korean partner SK On.
The Marshall 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, LFP, 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’s electric vehicle lineup has generated huge demand. To get as many Ford EVs to customers as possible, we’re the first automaker to commit to build both NCM and LFP batteries in the United States,” CEO Jim Farley said in a statement. “We’re delivering on our commitments as we scale LFP and NCM batteries and thousands, and soon millions, of customers will begin to reap the benefits of Ford EVs with cutting-edge, durable battery technologies that are growing more affordable over time.”
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, partially credited for enabling Ford’s battery investment in its own state.
LFP batteries are known for being durable. They also provide 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.
“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.
Ford is hosting a news conference about the project at its Ion Battery Park this afternoon. Ford executives and state officials including Gov. Gretchen Whitmer were slated to attend.
“Ford’s $3.5 billion investment creating 2,500 good-paying jobs in Marshall building electric vehicle batteries will build on Michigan’s economic momentum,” Whitmer said in a statement. “Today’s generational investment by an American icon will uplift local families, small businesses, and the entire community and help our state continue leading the future of mobility and electrification. 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 executives said Monday that the company is on track to hit its target of producing 600,000 EVs globally by year’s end.
Currently, the automaker predominantly uses NCM batteries in its vehicles. That chemistry, executives said, 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.
Executives touted the move to offer LFP batteries in Ford’s lineup as one that will support the buildout of the company’s domestic EV supply chain and bolster its bid to ramp up EV production, in part because of the lower costs associated with the chemistry.
The Marshall site has room for possible future expansion, executives said, as well as further vertical integration. Ford will own and operate the plant and employ the workforce. It will license battery cell technology from CATL, a world leader in LFP batteries, and tap the battery maker for additional services tied to LFP manufacturing.
“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,” Lisa Drake, Ford Model e’s vice president of EV industrialization, said. “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.”
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.
Asked about the potential political risks of coming to such an agreement with a Chinese company, Drake pointed out that CATL’s LFP batteries already are used in vehicles in the U.S. today, including in Tesla vehicles — but they’re all imported.
“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,” she said, “here Ford has control — control cover the manufacturing, control over the production, control over the workforce.”
jgrzelewski@detroitnews.com
Twitter: @JGrzelewski