Ford announced that it will reduce production capacity at its upcoming electric vehicle battery plant , due to reduced demand for its cars and rising labor costs. The American automaker says it will reduce the original planned investment of $3.5 billion to build the Michigan plant to about $2 billion. It is also considering hiring 1,700 workers instead of the 2,500 it had initially said.
Increase in labor costs
Inevitably, the company must adjust its plans to the costs labor, both to maintain product quality and to survive in the market.
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In this context, Ford's decision to reduce its investment in its new battery in Michigan becomes more understandable. Faced with this new reality, the company is looking for practical solutions to ensure its sustainability and protect its position in the market.
It's important to note that Ford is not the only company facing these challenges. The entire automotive is moderating its investments in an effort to adapt to the new economic order.
Reduced demand for electric vehicles
Additionally, with demand for electric vehicles currently declining ,Ford is reviewing its plans.
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Ford announced its ambitious plan to build a battery plant in Michigan in February of this year. The company said it would partner with China's Contemporary Amperex Technology (CATL), a company that makes LFP batteries. However, the plant will now only produce about 20 gigawatt-hours of batteries annually, which is about a 43% reduction from what the automaker.
For EVs to qualify for up to $7,500 in federal tax credits, automakers must source at least 40% of their battery materials from North America or U.S. trading partners by 2024. Ford's partnership with China's CATL has also made it a target of anti-China Republican politicians.
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Despite the investment cuts, the automaker still plans to open the new plant by 2026.Another problem the company has faced was the recent production during the strike last month. The company also recently postponed plans to build its battery plant in Kentucky.
Source: www.theverge.com
