Auto manufacturer Ford (NYSE:F) recently announced plans to resume construction of an electric vehicle battery plant in Michigan. However, the company will scale back on its investment in the factory as electric vehicle sales slump and labor costs increase.
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Initially, in February of this year, Ford unveiled plans for this factory with an estimated investment of $3.5 billion. However, construction was stopped two months ago due to a strike by the United Auto Workers union. With the strike now over, Ford is set to resume work at the battery plant.
According to the announcement, the company will reduce its annual battery production capacity from 400,000 units to 230,000 units. In addition, the number of jobs at the factory will drop from 2,500 to 1,700. However, the company declined to disclose the revised investment figure for the plant.
Mark Truby, a spokesperson for Ford Motors, confirmed that the plant will open in 2026, aligning with the original schedule announced in February. Ford said that the factory will produce lithium-iron-phosphate batteries, which are cheaper than the nickel-cobalt-manganese batteries used in most electric vehicles today. This will allow consumers to choose between batteries that are cheaper with a lower range or upgrade to batteries with more range and power.
These cutbacks at the Michigan plant are part of Ford’s broader strategy to reduce its EV investments by approximately $12 billion. Shares of the company declined 1.89% at the time of writing.
Is Ford a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on F stock based on six Buys, four Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 20% drop in its share price over the past year, the average Ford price target of $13.20 per share implies 29.35% upside potential.
