Ford Motor Company (NYSE:F) is slashing its $3.5 investment in an electric vehicle battery plant, faced with slower-than-expected consumer EV adoption and an impetus to cut costs in the wake of the autoworkers’ strike.
The automaker said it would cut production capacity on the plant by 43% to 20 gigawatt hours per year and reduce its headcount to 1,700 jobs from 2,500. The company didn’t specify what its investment would be, but the announced cuts would scale down to about $2 billion.
“We looked at all the factors. Those included demand and the expected growth for EVs, our business plans, our product cycle plans, the affordability and business to make sure we have we can make a sustainable business out of this plant,” chief communications officer Mark Truby said at a media briefing.
“After assessing all that, we are now good to confirm that we’re moving forward with the plant, albeit in a slightly smaller size and scope than what we originally announced.”
The plant is expected to open in 2026, Ford said.
The battery plant was initially announced in February with some backlash, as Ford is licensing technology from the Chinese battery manufacturer Contemporary Amperex Technology in order to produce lithium iron phosphate batteries.
Last month, Ford announced plans to eliminate or push back roughly $12 billion in EV investments. In addition to the Michigan plant, the automaker postponed construction of another EV battery plant in Kentucky.
One factor motivating the company to cut costs is the record labor agreement reached with the United Auto Workers union.
The contract increases base wages by 25% through April 2028 and includes cost-of-living adjustments. It also adds $850 to $900 per vehicle assembled in labor costs, according to Ford.
Shares of Ford fell 1.8% Tuesday afternoon.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
Follow him on Twitter @andrew_kessel