Ford Motor Company has announced plans to build an electric vehicle battery plant. The Gigafactory is to be built in Michigan and will cost around 3.5 billion US dollars. Together with CATL, customers are to be won in the USA for a more cost-effective technology that was developed in China. CATL grants Ford a license to manufacture lithium iron phosphate (LFP) batteries in Michigan and promises technical support to the US automaker.
IRA as a declared incentive
Meanwhile, building LFP batteries in Michigan allows Ford to receive significant subsidies for battery production in the U.S., which might help the company meet its goal of an 8 percent profit margin for its electric vehicles by 2026. The government subsidy is up to $45 per kilowatt hour and is intended to offset production costs. According to Ford Vice President Lisa Drake, the Inflation Reduction Act (IRA) was “incredibly important” in the company’s decision to locate its fourth battery plant and 2,500 jobs in Michigan.
Michigan invests in battery production
According to Archyde.com, the US state of Michigan granted just over a billion dollars in incentives over 15 years to win the project. These include grants under the “Critical Industry Program” of up to $210 million and $772 million for the designation of the project as a “Renaissance Zone”, which is intended to significantly reduce property taxes, including personal property taxes.