Ann Arbor (Informed Comment) – Ford Motor Co.’s CEO, Jim Farley, tweeted on Monday, “Today @Ford is announcing a $3.5B investment to build the first automaker-backed LFP battery plant in the U.S. bringing 2,500 jobs to Michigan. Good for America and our customers! All part of our $50B+ plan to innovate & lead the EV revolution.”
The new project has been christened “BlueOval Battery Park Michigan,” according to Phoebe Wall Howard at the Detroit Free Press. A wholly owned subsidiary, it forms part of Ford’s plan to invest $50 billion in its green transition around the world over the next three years.
The company needs this battery production capacity for its popular electric vehicles, including the Mustang Mach-E SUV and the F-150 Lightning truck, two rising stars in the EV firmament.
President Biden is pushing for a rapid transition to electric vehicles in the United States, and the Inflation Reduction Act has substantial tax credits in it for consumers to buy those vehicles. The IRA does, however, require cars to be assembled in the US and it eventually will require that their batteries be American-made, in order for the tax credits to kick in.
Michigan Governor Gretchen Whitmer celebrated the news, according to Clara Hendrickson at the Detroit Free Press, saying “It’s thrilling,” expressing relief that the project did not go to another state.
Local 4: “Ford to build $3.5B electric vehicle battery plant in Michigan”
Michigan needs the jobs to keep people from leaving the state. It has seen a small net population decrease during the past two years, losing 40,000 people since the 2020 census. Out-migration is partially offset by international in-migration (18,000 in 2022). Michigan’s population is a little over 10 million, reflecting the teens of this century’s net increase of population before the pandemic hit. Muslim and Arab Americans are major investors in Michigan, having formed tens of thousands of small businesses.
The state is awarding Ford $210 million from its Strategic Outreach and Attractive Reserve fund, Hendrickson reports. The fund was set up to attempt to keep auto-making in Michigan, after several new green energy and electric car projects were announced by the Big Three in Kentucky, Tennessee and Ohio. Ford will also receive substantial tax abatements for 15 years at the new battery production site in Marshall, Michigan, 100 miles west of Detroit.
Whitmer is backing the transition to electric vehicles and is proposing a state tax break of up to $2,400 for buyers of EVs.
Phoebe Wall Howard at the Detroit Free Press has described the 950-acre proposed battery plant at Marshall. The plant will build two kinds of lithium ion batteries: lithium iron phosphate and nickel cobalt manganese batteries. NCM batteries last longer, need less up-keep, and store more energy.
Ford canvassed many possible sites for the new battery factory, with Virginia seeming to be the front-runner. Ford is, however, building it in partnership with Contemporary Amperex Technology Co. Ltd (CATL), a Chinese firm, and Virginia Governor Glenn Youngkin rejected this plan. He said he did not want Ford to “serve as a front” for China in Virginia. In fact, CATL is not government-owned. In the past 17 years China has invested almost $200 billion in the United States and holds $870 billion in U.S. Treasury Bonds. If, as Youngkin apparently wants, Chinese firms pulled out of the U.S. en masse, the economic consequences would be dire. Youngkin was elected because Virginia voters thought he was one of the few not-crazy Republican politicians, but he just deprived southern Virginia of 2,500 jobs because he does not understand the contemporary Chinese economy. Sixty percent of China’s GDP is generated by private firms. In Communist Hungary during the Cold War, 5% of the GDP was generated by private firms. Although President Xi Jinping does have worrisome authoritarian tendencies, he has not so far been able to replace private firms with public ones.
Republicans in Michigan made similar criticisms. Hendrickson quotes a refutation by Michigan Economic Development Agency head Quentin Messer Jr., whom she quotes as saying, “Any incentive dollar will be going to a 100% wholly-owned Ford subsidiary. Not a dime will go to a Chinese entity . . . By this licensing of technology that Ford is doing, we are bringing this capability to the U.S.”
Ford points out that CATL is the biggest battery producer in the world and its batteries are already in cars driven by Americans, including in Teslas, but this is an opportunity to license this technology at an all-American plant.