Ford EV Battery Plant Work Paused Amidst Forced Labor Probe and UAW Strike
Key Takeaways:
- Ford is pausing work on its new $3.5 billion electric vehicle battery plant in Marshall, Michigan due to concerns about being able to “competitively operate the plant”
- The precise reason for the pause is unclear, but there is speculation that it could be related to the ongoing United Auto Workers union strike or the Congressional probe into Ford’s partnership with Chinese battery producer CATL
- Ford stated that it has not made any final decisions on the future of the plant, leaving plans in limbo
Ford announced on Monday that it’s halting further work on its new $3.5 billion electric vehicle battery plant in Marshall, Michigan.
The factory was originally slated to open in 2026, was set to employ 2,500 workers, and was supposed to produce enough battery cells to power 400,000 vehicles each year.
In an email, Ford spokesman T.R. Reid said that the automaker would be “pausing work and limiting spending on construction on the Marshall project until we’re confident that we’ll be able to competitively operate the plant.”
He also noted that “there are a number of considerations,” and “we haven’t made any final decision about the planned investment there.”
United Auto Workers Union members see the move as a calculated threat
The pause comes as Ford finds itself embroiled in a conflict with the United Auto Workers (UAW) union, which has been on strike against Ford, General Motors, and Stellantis since September 15.
Although Ford hasn’t given a specific reason for the decision, UAW President Shawn Fain believes it’s related to the ongoing strike and called it “a shameful, barely-veiled threat by Ford to cut jobs.”
Since electric vehicles require less labor to complete, UAW members are concerned about the future of their careers in the auto industry. “We are simply asking for a just transition to electric vehicles, and Ford is instead doubling down on their race to the bottom”, said Fain.
Meanwhile, the Congressional investigation into Ford continues
In February, Ford announced the new plant would use technology from Chinese firm Contemporary Amperex Technology (CATL).
However, since the original plans were unveiled, a congressional committee began investigating Ford’s collaboration with CATL due to the firm’s holdings in Xinjiang, a Chinese region so rife with forced labor that it is illegal to import materials from the region without proof that forced labor was not used in their production.
CATL has stated that it’s sold all its holdings in Xinjiang, and Ford says that it’s only using CATL’s technology, not its materials. However, concerns remain about CATL’s involvement in the region.
Rep. Mike Gallagher (R-Wis.), the chair of Select Committee on the Chinese Communist Party, said in a statement that he’s “encouraged to see Ford take a crucial first step to reevaluate its deal with the Chinese Communist Party-aligned EV battery firm, CATL.”
Ford stock remained stable after the news, but trouble may be lurking
Despite the multiple challenges facing the company, the pause didn’t send any immediate shockwaves through the market. Ford (NYSE: F) closed up 1.21% on Monday and down 1.19% the next day, essentially breaking even.
However, the recent threats to Ford’s labor force and its deal with CATL, which it previously viewed as a vital part of its plans to expand its EV production, could lead to trouble down the road. The inclusion of Chinese technology in its EVs could also make them ineligible for the Biden administration’s $7,500 EV tax credit, which could significantly reduce sales numbers.
The bottom line
Ford paused work on its new EV battery plant amidst labor strikes and an ongoing congressional investigation. Although Ford stock didn’t make any major moves since the announcement, these issues could spell trouble for the company down the line.
