Ford will construct a battery plant in Michigan to benefit from EV tax credits

Ford will benefit from additional federal tax credits for electric vehicles by investing $3.5 billion in the construction of a battery plant in Michigan.

According to Ford, the plant will be run by Ford Motor Co. as a wholly owned subsidiary, but it will produce batteries by utilizing “knowledge” and services provided by Contemporary Amperex Technology Co., or CATL, in China. Tesla receives batteries from CATL, the largest battery manufacturer in the world.

The site of the plant will span 950 acres in southern Michigan, close to the town of Marshall. Ford claims that when it goes into production in 2026, it will employ 2,500 people.

In August, Congress approved the $430 billion Inflation Reduction Act (IRA) to change the rules for EV tax credits. Customers who purchase an electric vehicle will be eligible for tax credits under the new law. The amount of these credits will depend on whether the vehicle itself, as well as its batteries and battery components, were manufactured in the United States and whether the battery minerals were extracted there.

Lisa Drake, Ford’s vice president of EV industrialization, stated in a press conference that Ford had considered locations outside the United States for this battery plant but settled on the Michigan location in part due to the tax credit rules.

“I think the IRA was incredibly important for us and, frankly, it did what it was intended to do,” she said. “And it allowed the United States to capture 2,500 fantastic technical jobs and all the indirect jobs that go with it plus the future growth.”

The plant will produce batteries made of lithium iron phosphate, or LFP (lithium ferro-phosphate). This kind of battery doesn’t use nickel or cobalt, two elements that can be hard or expensive to get from the ground.

Compared to the NCM (nickel, cobalt, and manganese) batteries that are currently utilized in Ford EVs, LFP batteries charge faster and last longer when frequently charged to their full capacity. However, NCM batteries are able to store more power for a weight that is comparable, and they perform better when pulling heavier loads and in cold temperatures.

Ford will begin offering the less expensive LFP batteries on base model Mustang Mach-E SUV models later this year and, beginning next year, on some F-150 Lightning electric pickup truck models. Until the Michigan battery facility is operational, those batteries will initially be imported from CATL in China.

In addition to the Kentucky and Tennessee plants that Ford announced in 2021, the battery plant will be built. Together with SK Innovations, a South Korean company, Ford is building those plants. By the end of 2026, Ford has stated that it intends to be able to produce 2 million electric vehicles worldwide.

By the end of this year, the company anticipates having the capacity to produce 600,000 electric vehicles.