American legacy automaker Ford has just lost more than half of its supposed state factory incentives due to its decision to scale back electrification plans.
Ford’s state factory incentives cut in half
The state of Michigan decided to reduce Ford’s tax breaks by more than 50% to match its plans to scale back in the BlueOval Battery Park project, Automotive News reported, citing the Michigan Economic Development Corp.’s (MEDC) disclosure on Tuesday.
Michigan has reportedly reduced the tax incentives it will offer Ford to $409.1 million. This figure indicates an over 50% drop from the original deal of $1.03 billion.
In addition, the MEDC will also withdraw $772.8 million for a 15-year Renaissance Zone tax break on top of the $100.8 million in grant money for failing to meet job creation targets at the Ford Rouge Electric Vehicle Center (REV-C).
EV investment downgrade
In hindsight, Ford announced plans to substantially downsize its original electric vehicle and battery production plans in Michigan in November 2023.
To be specific, Ford cut the initial investment for its electric vehicle battery factory in Marshall from $3.5 billion to just around $2.5-$3 billion.
The number of expected job openings also declined from the original deal of 2,500 to between 1,700 and 2,100 positions.
In effect, the expected annual production capacity of 35 GWh at the BlueOval Battery Park also fell by more than 40% to just about 20 GWh.
“The restructured incentive package will appropriately and necessarily address the project’s rightsizing, balancing the company’s investment and growth in Michigan.”
MEDC
Ford declared that the 1.8 million sq. ft. facility is now 20% finished, aligning with its goals to kick off lithium iron phosphate (LFP) battery production in 2026. The batteries produced at the plant will power Ford’s next-gen EVs.
Ford’s EV sales jump in Q2 2024
Ford reported significant improvements in its all-electric vehicle sales in the United States in June and Q2 2024. https://ev-a2z.com/news/ford-reports-strong-ev-sales-growth-in-the-us-in-june-and-q2-2024/The monthly and year-to-date results increased 18% YoY (6,972) and 61% YoY (23,957), respectively.
Year to date, Ford’s BEV sales surged 72% YoY to 44,180 units. These remarkable sales increases enabled Ford to remain America’s second top-selling EV brand, trailing behind Tesla.
Despite the state factory incentives cut in Michigan, Ford is still expected to advance in the EV market in the coming quarters due to the imminent arrival of its new models: Explorer, Lincoln Aviator, Mustang Mach-E Rally, extended-range E-Transit, and other low-cost EVs.
