Ford Motor Co. CEO Jim Farley said on Friday that the company is waiting for an agreement with the United Auto Workers (UAW) and clarity on content regulations in President Biden's Inflation Reduction Act (IRA) before moving forward with plans for a battery plant in Marshall, Michigan.
Farley said the company and the union are close to reaching a record wage and benefit deal, but talks over job security at the battery plant have stalled. The union announced on Friday that it would expand the strike to a Ford SUV plant in Chicago. In addition to battery plants, retirement benefits and health care are sticking points, the UAW said.
Ford has so far announced that it will build four battery factories in the United States, three of which are in Tennessee and Kentucky in a joint venture with South Korea's SK Innovation. The fourth is located in Marshall, Michigan, where CATL will license technology to Ford to produce lithium iron phosphate batteries. Such batteries are cheaper and more stable than nickel-based batteries and are key to lowering the price of electric vehicles.
Ford suspended construction at its Michigan plant earlier this week, with the UAW accusing it of using scare tactics to intimidate union negotiators.
Key factors behind pausing the Marshall facility are "labor costs, the final wording of the IRA, even the sustainability of the products themselves that are negotiated in the contract, whether we can invest in those locations and those products so that we can right-size Marshall," Farley said. "Politics are not part of that calculation."
For vehicles to receive the full IRA $7,500 tax credit, content regulations require that 40% of electric vehicle battery raw materials must be extracted and processed in the United States or a country that has a free trade agreement with the United States, and 50% of battery components must be manufactured in North America, with the above proportions gradually increasing over time.
"We're pausing because negotiations and all the factors I mentioned are still at play," Farley said. "Then we'll decide how big or small the Marshall plant should be. We have a lot of options."