- Ford paused construction of a multi-billion-dollar battery plant in Michigan it planned to operate with China’s largest battery company in the wake of a UAW strike, quality problems and huge losses on electric vehicles.
- Because of the Biden Administration’s regulations to force automakers to produce electric vehicles, taxpayers are subsidizing them and the plants that build them by billions of dollars.
- Even with subsidies, electric vehicles are not profitable, with Ford losing $60,000 per vehicle.
- China controls the world’s battery manufacturing, mining and processing of the required materials with inexpensive coal energy that runs factories and processing refineries.
Ford Motor Company announced that it would be pausing the construction of a billion-dollar plant in Marshall, Michigan due to uncertainties surrounding its ability to operate competitively. Ford was to invest $3.5 billion in the plant and partner with Chinese battery company Contemporary Amperex Technology (CATL) for the production of battery cells. Ford stated, “We’re pausing work and limiting spending on construction on the Marshall project until we’re confident about our ability to competitively operate the plant.” With billions of dollars in losses projected for this year alone, Ford is feeling the financial strain of Biden’s push for electric vehicles. In fact, Ford recently reported that it will lose $4.5 billion on electric vehicle production this year, a 50 percent increase from the previously projected $3 billion loss. Ford reported a loss of $60,000 per electric vehicle produced.
Ford is slowing its EV production ramp-up and plans to quadruple sales of gas electric hybrids over the next five years. The company warned that increases in pay and benefits sought by the United Auto Workers (UAW) would undermine its efforts to ramp up manufacturing of electric vehicles. If unions got all that they were asking for, “We would have to cancel our EV investments,” Jim Farley, Ford’s chief executive, said. UAW demands include a 40 percent increase in pay, a shorter workweek, protection against inflation and other benefits.
Because Biden regulations, not market forces, are the driving force for the EV transition, subsidies are needed for EV battery and auto production. Congress allocated over $7 billion in electric-vehicle tax incentives in the Inflation Reduction Act (IRA) for domestic production of electric vehicles. Michigan is providing $1.7 billion in state incentives for the Marshall plant that is expected to employ 2,500 workers when production begins. China, however, would have some control over both the technology and the factory operations at Ford’s Michigan battery plant, as well as receiving millions in IRA tax credits designed to make America less reliant on China. China dominates battery technology, accounting for over 70 percent of global electric-vehicle-battery-production capacity. CATL, as the largest battery producer in the world, profits from close relations with the Chinese Communist Party.
China dominates the EV battery supply chain and controls minerals that are critical materials for EV batteries, often mined with low-wage, child, or slave labor. It also uses cheap coal power for processing the critical minerals and manufacturing batteries. CATL obtains lithium from its operations in western China’s Qinghai Province and receives government funding. Some of its cobalt comes from Kisanfu, in the Democratic Republic of Congo, where it purchased 25 percent of the Kisanfu copper and cobalt mine, owned by China Molybdenum, in 2021 for $137 million.
The Marshall factory planned to produce batteries whose main ingredients are lithium, iron and phosphate, which is an alternative to batteries made from lithium, nickel and cobalt. Lithium-iron-phosphate batteries, or LFP, are heavier than batteries made with nickel and cobalt but cost less. LFP batteries are not currently mass produced in the United States. Automakers, including Tesla, sell cars with LFP batteries imported from China. Ford argued that making the batteries in the United States with Chinese technology is better than importing them.
As Heritage’s Diana Furchtgott-Roth writes, Ford does not need to partner with China because it has other options. It is working with South Korean SK Innovation to build batteries at the BlueOval SK Battery Park in Glendale, Kentucky—a $6 billion investment. Kentucky also has a $2 billion battery plant built by Japanese Envision AESC, which is building other battery plants in South Carolina and Tennessee. South Korea’s LG and Hyundai are opening a $4.3 billion plant in Georgia.
China requires electric cars sold in China to have Chinese-made batteries for buyers to qualify for credits. GM changed the batteries in its electric Buick Velite from South Korean LG batteries to CATL batteries in 2016 to comply with Chinese regulations. The Buick Electra E5 sold in China, will have CATL batteries, while the Electras sold in America will have batteries from South Korea’s LG Energy Solution. In December, Honda signed an agreement with CATL to purchase enough batteries to power 1 million electric vehicles from 2024 through 2030. The Honda vehicles will be made in China, and potentially exported to America.
Quality Checks on F-150 Lightning Trucks
Ford recently cancelled dealer stock orders for the 2023 F-150 Lightning in the United States as all-electric pickups are undergoing “additional quality checks” at the Rouge Electric Vehicle Center. No customer orders were canceled. Ford says the issue is not safety-related. Ford is working to match its 2023 supply with demand as the company prepares to change over to 2024 Lightning production later this year.
Earlier this year, Ford shut down Lightning production for five weeks after a battery fire occurred in a Dearborn, Michigan holding lot. The fire burned one pickup truck and spread to two others. There were no injuries. Ford worked with battery supplier SK On to identify the issue and remedy the situation, and restarted production in March.
Conclusion
If people bought electric vehicles the way they buy cars with internal combustion engines, the U.S. government would not have to subsidize producers to make electric vehicles and fund tax credits for consumers to purchase them. Ford receives no subsidies for production of America’s bestselling vehicle, the F-150 pickup truck, and purchasers receive no tax credits for buying them. America should not accept replacing its current energy independence with a dependence on an EV supply chain controlled by China.
The government’s push for electric vehicles is a financial burden on companies and the potential impact on the American workforce could be massive. As the UAW strike continues and the future of the automotive industry remains uncertain, President Biden will face challenges in his goal to transition to electric vehicles. The pause in construction at the Ford plant serves as a warning sign for the potential drawbacks of the EV mandates and the need for careful consideration and planning in such a significant industry shift.
