Michigan cuts back subsidies for Ford’s largescale EV battery plant

Michigan has pulled back hundreds of millions of dollars in economic incentives for multiple Ford projects.

The Michigan Strategic Fund voted to amend the subsidies Tuesday, July 9 after Ford previously scaled back its investments due to a shifting market for electric vehicles. This impacts a sprawling battery plant in Marshall and a multi-billion-dollar investment in Ford facilities across the state.

“We are nimbly adjusting our manufacturing operations to match evolving customer demand and the Michigan Strategic Fund board is revising its incentive offers accordingly,” said Tony Reinhart, Ford’s director of state and local government affairs in a statement.

Ford originally planned to invest $3.5 billion in constructing BlueOval Battery Park Michigan on a rural mega site in Marshall. After pausing the project last fall, the automaker announced in November it would move forward with the lithium battery plant at a smaller scale.

Ford now will spend at least $2.5 billion to build the 1.8-million-square-foot plant on roughly 500 acres of the 1,900-acre mega site. The automaker initially expected to create 2,500 jobs, but that number has been adjusted to at least 1,700 under the new scope of the project.

Michigan assembled a patchwork of incentives nearing $1.8 billion to support Ford and development of the mega site, deemed the Marshall Area Jobs Opportunities and Recreation, MAJOR, Campus. But those subsidies were cut nearly in half after Tuesday’s vote.

“The restructured incentive package will appropriately and necessarily address Ford’s revised project scope, balancing that company’s investment and growth in Michigan,” said Quentin Messer, CEO of the Michigan Economic Development Corp.

The board and Ford reached a “mutual recission” of a 15-year tax break valued at $772 million; additionally, a $210 million grant will be lowered to a minimum of $141 million and maximum $166 million. No grant dollars have been given to Ford yet.

Meanwhile property tax and state education tax breaks increased from $52 million to $224 million. Christin Armstrong, from the Michigan Economic Development Corp., said despite nixing one major tax break, there was still “a desire to keep a tax abatement on the table” to support the project.

Separate funding awarded to the Marshall Area Economic Development Alliance, MAEDA, will not change, according to the state. Two grants totaling $185.3 million were given to MAEDA last year to prep the remaining acres of mega site for other future projects.

A supplemental budget bill also poured millions of dollars into developing the MAJOR Campus. The state gave $299.7 million to MAEDA to purchase land and upgrade the site and $330 million to the Michigan Department of Transportation for road improvements.

About $77.4 million has been spent to date – $3.4 million by MDOT and $74 million by MAEDA.

BlueOval Battery Park Michigan has faced pushback, including a lawsuit that’s been dismissed, from Marshall residents concerned about the impact of an industrial park on the rural community. The hefty incentives were also criticized, with Michigan House Republican Leader Matt Hall of Richland Township calling it a “bad deal” last year and Michigan should “right-size state funding.”

Two years ago, Ford also planned to invest $2 billion and create 3,200 jobs in Michigan by expanding production of the F-150 Lightning electric truck at the Rogue Electric Vehicle Center, making a Ranger pickup truck at the Michigan Assembly Plant and producing a new Mustang coupe at the Flat Rock Assembly Plant.

Earlier this year, Ford adjusted by reducing production of the electric F-150 while boosting manufacturing of Broncos at the Michigan Assembly Plant. Ford still met its job goal, but the jobs were shifted to other plants. Because of that, the automaker agreed to forgo a $100 million state grant.

“We’re increasing our capacity to produce new electric vehicles and batteries and make capital based on existing internal combustion engine manufacturing and constructing a new package facility,” Reinhart said. “So we are also delivering the overall jobs and investments as planned.”

Ford scaled back its plans for BlueOval Battery Park Michigan and the electric F-150 as electric vehicle sales started to soften. Although EV sales rose by 2.6% in the first quarter of the year, according to Kelley Blue Book, they fell by 15.2% compared to the end of 2023. Ford also expected to lose $3 billion on EV sales last year but saw numbers climb 72% so far this year.

Stephanie Valdez Streaty, director of Industry Insights at Cox Automotive, said this is the first quarter-over-quarter downturn since 2020 but she’s expecting “more new products” to drive EV sales higher this year.

“Even so, we’ll continue to see ups and downs as the industry moves towards electrification,” she said in an April statement.

Despite the paused construction, Ford says it remains on track to begin production at BlueOval Battery Park Michigan by 2026.

“At the time that Ford announced a pause, we were already two months ahead of schedule with the project so there is no delay in the project,” said Terri Fitzpatrick, senior real estate adviser with the MEDC. “It was scheduled to begin late last fall and it’s scheduled to be completed in 2026. That schedule has not shifted at all.”