Ford Motor Co. has expressed concerns about potential job losses at its electric vehicle (EV) battery plant in Marshall, Michigan, if Congress reduces clean energy manufacturing subsidies.

The US$3 billion facility is set to begin production in 2026 and is expected to employ 1,700 workers, producing 20 gigawatt-hours of lithium iron phosphate (LFP) batteries annually.

The plant, located about 100 miles west of Detroit, has drawn political scrutiny due to Ford’s licensing of LFP battery technology from China’s Contemporary Amperex Technology Co. Ltd (CATL), the largest battery producer globally.

Ford claims it fully owns and controls the facility, which would be the first in the US to manufacture LFP cells specifically for automotive use.

Ford’s concerns is the production tax credit under the Inflation Reduction Act, known as 45X, which incentivizes domestic battery cell and pack manufacturing.

According to Benchmark Minerals, Ford could earn around US$2.3 billion in credits between 2026 and 2029 under the current law.

However, ongoing Congressional budget negotiations may change or remove these incentives.

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🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ EV subsidies have a bipartisan history despite current political disputes

Federal support for EV has historically crossed party lines, dating back to the 2007 Energy Independence and Security Act signed by President Bush, which promoted plug-in hybrid development 1.

The phasing structure of EV incentives follows a consistent pattern across administrations. For example, the 2005 Energy Policy Act established tax credits of up to US$3,400 for hybrid vehicles with a 60,000-vehicle manufacturer cap before phasing out 2.

Today’s production tax credits follow this same principle, creating predictability for manufacturers who make investment decisions based on these policies. This explains Ford’s argument that “it’s not fair to change policy after all the expenditures have been made.”

Unlike more contentious climate policies, EV tax credits were designed to balance energy independence, economic competitiveness, and environmental goals, which historically garnered support from both parties until becoming caught in broader political disputes 1.

The Marshall plant represents a $3 billion investment made with the expectation that these longstanding incentive structures would remain stable through their natural phase-out periods.

2️⃣ US-China battery competition involves complex tradeoffs

China’s dominance in LFP battery technology stems from over a decade of strategic government support totaling approximately $230.9 billion between 2009 and 2023, creating an expertise gap that American manufacturers must navigate 3.

While Chinese government support per EV has decreased from US$13,860 in 2018 to US$4,800 in 2023, Chinese manufacturers have maintained competitiveness through scale and technological advancement 3.

Ford’s strategy of licensing technology from CATL while maintaining ownership of the manufacturing facility represents a middle path—gaining access to established battery chemistry while creating American jobs and building domestic manufacturing capabilities.

The Marshall plant exemplifies the complex policy challenge facing American manufacturers: balancing the need for rapid technological advancement with domestic manufacturing goals.

3️⃣ Manufacturing investments generate broader economic impacts

Every dollar spent in manufacturing generates US$2.69 in total economic activity throughout the economy, making the potential $3 billion Ford investment significantly more valuable than the headline figure suggests 4.

The 1,700 jobs created at the Marshall plant would earn an average of $102,000 annually based on current manufacturing wages, representing high-quality employment opportunities in a sector that has lost 3.82 million jobs to offshoring since 2001 5, 4.

Research shows that manufacturing employment has particular significance for economic resilience—manufacturing workers earn 13% more in wages and benefits than comparable workers in other sectors 4.

The plant’s focus on advanced battery technology aligns with the evolution of manufacturing work toward higher-skilled positions, as traditional manufacturing roles increasingly require technological expertise amid automation 6.

The Marshall project represents the type of domestic manufacturing investment that both creates direct jobs and strengthens regional economic networks, particularly important given that 93% of U.S. manufacturers are small companies with fewer than 100 employees that benefit from the presence of larger facilities 4.

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