(Bloomberg) -- Ford Motor Co. is waiting on a deal with the United Auto Workers union, as well as the clarification of content rules in President Biden’s Inflation Reduction Act, before it moves forward with plans to build a battery plant in Marshall, Michigan, Chief Executive Officer Jim Farley said Friday.
Farley said the company and the union, which expanded its strike to a Ford SUV plant in Chicago Friday, are close to a record deal on wages and benefits, but talks are stalled on guarantees over jobs at battery plants. The UAW says retirement benefits and healthcare are also sticking points, in addition to battery plants.
Ford has announced four battery plants in the US so far, including three in Tennessee and Kentucky, which are a joint venture with Korea’s SK Innovation. For the fourth, in Marshall, Michigan, Ford is licensing technology from China’s Contemporary Amperex Technology Ltd., also known as CATL, to make lithium-iron-phosphate batteries, which are cheaper and more stable than nickel-based cells and key to making EVs more affordable.
Ford paused construction of the Michigan plant earlier this week, prompting accusations from the UAW that it’s using scare tactics to try to intimidate union negotiators.
More: Union Slams Ford for Idling Michigan Battery Plant Project
The key factors behind pausing work at the Marshall plant are “the labor cost, final language in the IRA, and even the sustainability of the products themselves that do get negotiated in the contract, whether we can invest in those locations and those products so we can size Marshall appropriately,” Farley said. “Politics are not part of that calculus.”
The partnership with CATL has made the project a target of political attacks from some Republican lawmakers, who have accused CATL of being affiliated with the Chinese Communist Party. Ford says it owns the plant and will employ US workers there.
In order for vehicles to qualify for the full $7,500 consumer tax credit available under the IRA, content rules require that 40% of raw materials in an EV battery be extracted and processed in countries that have a free-trade agreement with the US, and 50% of battery components must be made in North America, with the percentages increasing over time.
“We’re taking a pause because of the negotiations and all the factors I mentioned are still in play,” Farley said. “And then we’ll decide on how big or small Marshall should be. We have a lot of optionality.”
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