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Ford Restarts Production of Electric Vehicle Batteries in Michigan with Reduced Capacity

Ford Motor said Tuesday that it was resuming work on an electric vehicle battery plant in Michigan but significantly scaling back its plans in part because of slow E.V. adoption in the United States.

A company spokesman said that Ford now expected the plant in Marshall, Mich., to create 1,700 jobs rather than 2,500, but that it still expected production to begin in 2026.

Demand for electric vehicles is “not growing at the rate that we originally expected,” said the Ford spokesman, T.R. Reid. In the most recent quarter, large auto companies like Ford reported that E.V. sales had increased, but not at a rate sufficient to keep up with the Biden administration’s ambitious goals.

The plant was originally planned to produce 35 gigawatt-hours’ worth of batteries annually, which Ford estimated was enough to equip about 400,000 vehicles. Now, the plant will produce 20 gigawatt hours annually, enough for roughly 230,000 vehicles, or a 42.8 percent cut.

Ford did not specify exactly how much money it would be pulling back from the project, but said it would be roughly equivalent to its reduction in output. If the 42.8 percent cut in output was applied to its investment, it would represent a $1.5 billion reduction in the initially announced investment of $3.5 billion.

Ford said in September that it was suspending construction because of concerns that it would not be able to manufacture products at a competitive price. At the time, the company was in the middle of contentious negotiations with the United Automobile Workers union.

Rising labor costs were also a factor in Ford’s decision to scale back its plans for the factory, Mr. Reid said. Ford’s contract agreement with the U.A.W., which has been ratified by union members, raises the top wage for production workers by 25 percent.

The agreement will allow U.A.W. members to be transferred to battery and electric-vehicle plants under construction, like the one in Marshall. If workers there choose to unionize, they will be protected under the U.A.W.’s contract.

The U.A.W. hopes to keep its membership rates up amid the transition to electric vehicles, but the automakers have pushed back, arguing that it puts them at a disadvantage compared with their nonunionized competitors.

The U.A.W. did not immediately respond to a request for comment on Tuesday.

Ford has also faced criticism from conservative lawmakers over its plan to license technology from CATL, a Chinese battery maker. Lithium-iron-phosphate batteries, or LFP, are not currently produced in the United States. Some U.S. electric automakers, such as Tesla, import LFP batteries from China.

It is not clear whether U.S. companies that license technology from other countries will qualify for government incentives to promote the shift from fossil fuels. Mr. Reid said Ford was “confident about the technology licensing agreement for this plant.”

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