TLDRs;
- Ford’s $3B EV battery plant in Michigan may be jeopardized by changes to federal clean energy tax credits.
- The plant, expected to open in 2026, would produce LFP batteries and employ 1,700 workers.
- Ford could lose up to $2.3B in tax benefits if Congress scales back the Inflation Reduction Act’s 45X credit.
- New tariffs and potential cuts to EV incentives add financial pressure, threatening Ford’s broader electrification strategy.
Ford Motor Company’s ambitious $3 billion battery plant in Marshall, Michigan, is facing fresh headwinds as political uncertainty clouds the future of electric vehicle subsidies in the United States.
With construction underway and production scheduled to begin in 2026, Ford is warning that potential cuts to key tax credits could jeopardize the plant’s economic viability and put as many as 1,700 jobs at risk.
At the center of the debate is a provision in the Inflation Reduction Act, known as the 45X tax credit, which offers incentives for domestic battery cell and pack manufacturing. Ford’s facility, located 100 miles west of Detroit, is set to produce 20 gigawatt-hours of lithium iron phosphate batteries annually, a critical component for electric vehicles.
The plant represents a cornerstone of the company’s broader transition to electric mobility, aimed at reducing reliance on foreign supply chains while boosting American manufacturing.
Ford Warns of Financial Fallout if Policy Changes
Notably, Ford has been candid in its messaging to lawmakers, arguing that the success of the Marshall facility hinges on the stability of the current subsidy framework. Benchmark data suggests Ford could earn around $2.3 billion in credits between 2026 and 2029 if the law remains intact. However, recent budget negotiations in Congress have introduced the possibility that these incentives could be weakened or eliminated, triggering what Ford believes could be a devastating blow to the plant’s future operations.
The company further contends that altering the subsidy policy after billions have already been invested would create a chilling effect on American manufacturers. Historically, EV-related tax credits have enjoyed bipartisan support, dating back to the Bush-era Energy Independence and Security Act of 2007.
This precedent, Ford argues, gave companies the confidence to make long-term investments. Changing the rules midstream, in their view, undermines that trust.
Tariff Ripple Effects add to Economic Strain
Ford’s concerns are compounded by additional financial strain stemming from new tariffs on vehicles imported from Mexico. Earlier this year, the company announced it would raise prices on some EV models by up to $2,000 due to rising costs triggered by these trade policies. That adjustment came after Ford estimated the tariffs would add $2.5 billion in expenses through the end of 2025.
Simultaneously, political pressure from figures like former President Donald Trump and House Speaker Mike Johnson has cast doubt on the future of the $7,500 federal EV tax credit, further muddying the financial landscape for automakers navigating the transition to electric mobility.
China ties Fuel Political Scrutiny
Adding fuel to the controversy is Ford’s licensing arrangement with Contemporary Amperex Technology Co. Ltd (CATL), a Chinese battery giant. While Ford maintains full ownership and operational control of the Marshall plant, critics have seized on the partnership as evidence of continued dependence on foreign technology.
The arrangement was designed to fast-track access to proven LFP battery chemistry, helping Ford reduce costs and accelerate production while still creating jobs on American soil.
Yet, for some policymakers, the optics of working with a Chinese firm, even indirectly, have stirred skepticism, especially as the U.S. seeks to establish technological independence in clean energy.
High Stakes for Workers
Beyond politics, the Marshall project represents a high-stakes investment in American labor and manufacturing. Ford estimates that the 1,700 positions created will offer wages averaging over $100,000 annually. Economists note that every dollar spent in manufacturing generates nearly $2.70 in total economic activity, making the plant’s potential impact far greater than its headline cost.
In a climate where global competition, national security, and economic resilience increasingly intersect, the future of Ford’s Michigan facility could become a bellwether for how America navigates its clean energy ambitions amid rising political divisions.
