Over $1 billion in taxpayer subsidies for a Ford-CATL electric vehicle battery plant in Marshall was cut by more than half on Tuesday, following the automaker’s decision to downsize the facility.
“The state was disappointed and, frankly, so was Ford,” Tim Nash, auto expert director of McNair Center, told WWMT. “The fact of the matter is, customers are just not buying EVs the way that they thought they would.”
The Michigan Economic Development Corporation’s Strategic Fund Board voted unanimously on Tuesday to cut a $210 million grant to create 2,500 jobs to between $141 million and $166 million, depending on revised plans by Ford to reduce jobs to between 1,700 and 2,100, Bridge Michigan reports.
The board also voted to eliminate a $772.8 million tax abatement, and impose $172.6 million in increased state education taxes.
“Overall, the two incentive changes dropped Ford’s potential savings from $1.03 billion to between $384 and $409 million, a 60% decline,” according to Bridge.
The move follows plans announced by Ford late last year to scale down its planned $3.5 billion BlueOval Battery Park near Marshall by $1 billion, reducing the footprint from an initial 730 acres to 500. Promised jobs were also slashed from 2,500 to 1,700.
“We are nimbly adjusting our manufacturing operations to match evolving customer demand and the Michigan Strategic Fund board is revising its incentive offers accordingly,” Ford government affairs director Tony Reinhart said in a statement following Tuesday’s vote.
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Ford’s EV business lost $4.7 billion in 2023, and that trend is continuing in 2024.
During the first quarter, Ford sold 10,000 electric vehicles, losing $132,000 on each, according to the data.
Despite the losses, Ford is forging ahead on construction at the Marshall battery plant, with revised plans expected to produce about 20 gigawatt hours of capacity annually when it opens in 2026. The plant is currently about 20% complete, and will comprise a cell plant and pack plant, along with support buildings, spanning 2 million square feet once it is, according to a Ford statement.
“BlueOval Battery Park Michigan will play an important role in our plan to help make electric vehicles more accessible and affordable by producing low-cost (lithium iron phosphate) batteries in the U.S. and not relying on imports,” said Lisa Drake, Ford’s vice president of electric vehicle programs and energy supply chain. “We continue to make great progress establishing America’s first automaker-backed LFP battery plant right here in Michigan.”
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Meanwhile, EV sales are slowing, according to Nash.
He told WWMT an underwhelming 7% of vehicles sold in the U.S. last year were electric.
“This year, the numbers are slowing,” Nash said. “We are running on an annualized rate of 6.8%, so that is a decline in electric vehicles overall.”
Other research shows many of the folks who did buy an EV now regret it.
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Last month, McKinsey & Co. released a survey of 30,000 people “who regularly use mobility,” and found 46% of U.S. EV users would likely return to using internal combustion vehicles.
The figure highlights widespread dissatisfaction with EV limitations including a lack of public charging infrastructure, high costs of ownership, range anxiety, and overall stress of keeping an EV battery charged.
There’s also issues with Michigan EV incentive deals involving nondisclosure agreements with companies tied to the Chinese Communist Party, slave labor in the supply chain, environmental and national security concerns, and public resistance to the government-imposed transition to EVs.
Gov. Gretchen Whitmer’s MI Healthy Climate Plan set a goal of 2 million registered EVs in the Great Lakes State by 2030, or 23% of the state’s 8.76 million registered vehicles.
Through the first quarter of 2024, the state had a mere 46,792 registered EVs, accounting for 2% of the goal. The situation means Michigan will need to register about 29,000 EVs per month for the next 67 months to fulfill Whitmer’s wishes.
The lack of interest, however, hasn’t prevented the governor and her Democratic allies in the legislature from approving more than $2 billion in EV business incentive deals that Whitmer expects to create 12,000 jobs.
With $1 billion already spent, a Bridge Michigan analysis found only 200 jobs have been created through mid-June.