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Ford chief executive Jim Farley is downsizing plans for a new low-cost battery cell plant in the automaker’s home state of Michigan amid a sharp slowdown slump in EV sales.
The market for electric vehicles is currently experiencing a “trough of disillusionment,” according to industry researchers at Cox Automotive, spurred in part by soaring borrowing costs that put the price of an EV out of reach for many Americans.
In a statement on Tuesday, Ford said it would reduce the planned factory size by some 40% to around 20 gigawatt-hours of annual cell capacity, roughly enough for 300,000 cars. Staffing would drop by a third to 1,700 jobs.
“We are rightsizing as we balance investment, growth, and profitability,” Ford said, adding it remained bullish overall on its long-term strategy for EVs even if it was less ambitious in scope.
Previously Ford had targeted 35 GWh worth of cells per year built by a workforce of 2,500 people for the new factory in Marshall, located about 100 miles west of Detroit.
While it confirmed the start of production remained slated for 2026, it did not say whether spending would still amount to the previously guided $3.5 billion.
Marshall is slated to become Ford’s first battery manufacturing plant to produce lithium iron phosphate cells (LFP), a low-cost chemistry popular in China where EV prices favor affordability over range and performance.
Tesla employs this type of cell chemistry in its entry level Model 3 and Model Y vehicles, since the bulk of the cost of an EV comes from purchasing battery-grade metals like nickel and cobalt. While heavy and therefore range-reducing, iron is a far more commonly found element that is cheap to procure and is more robust in terms of a battery’s fire safety.
Ford’s Mustang Mach-E among the slowest selling EVs
Ford, which is currently vying with GM’s Chevrolet for the honor of being a very distant second to Tesla in the U.S. market, has set a target of building EVs at a pace of 2 million units globally when annualized by late 2026.