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(Reuters) -Ford Motor said Monday it has paused work on a $3.5 billion battery plant in Michigan, citing concerns about its ability to competitively operate the plant.
The announcement comes as Ford (NYSE:F) has repeatedly upped its offer to the United Auto Workers union in contract talks. President Joe Biden on Tuesday is set to visit Michigan to join a UAW picket line in support of striking workers at the Detroit Three automakers.
Republicans in Congress have been probing Ford’s battery plant plan in Marshall, Michigan, using technology from CATL, the world’s largest battery maker.
“We are pausing work and limiting spending on construction on the Marshall project until we’re confident about our ability to competitively operate the plant,” Ford said Monday declining to say what specific reason triggered the decision. “We haven’t made any final decision about the planned investment there.”
Ford in July forecast a full-year loss of $4.5 billion on its electric vehicle unit – 50% higher than projected earlier this year – and said it was slowing its EV production ramp up.
The auto industry is watching how new rules around future EV tax credits will be implemented as they make investment decisions on producing batteries for their transition to EVs.
In 2022, Congress passed the $430 billion Inflation Reduction Act (IRA) which will bar future $7,500 consumer EV tax credits if any battery components are manufactured or assembled by a “foreign entity of concern.”
Ford has been awaiting guidance to determine if batteries operated by the Marshall plant would run afoul of the requirements.
