Will automakers give in to the union's high demands in the U.S.? 5:55

(CNN) -- Ford halts construction of a new $3.500 billion electric vehicle battery plant in Michigan, even as the transition to electric vehicles has become a major sticking point in a United Auto Workers strike against automakers Ford, GM and Stellantis.

No final decision has been made so far on whether the plant will ultimately come online, Ford spokesman TR Reid said.

If completed, the plant will be located on a 384-hectare site in southern Michigan, near the city of Marshall. Ford plans to employ 2,500 people when the plant starts production in 2026. Ford had announced plans for the battery factory last February.

"We are pausing work and limiting spending on the construction of the Marshall project until we are confident of our ability to operate the plant competitively," Reid said in an emailed statement. "There are a number of considerations."

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The Ford Mustang Mach-E could be one of the Michigan plant's battery-powered electric vehicles. (Credit: Gabe Ramirez/CNN)

Ford, along with General Motors and Stellantis, is currently facing a strike by the United Auto Workers. Reid did not say whether contract negotiations with the UAW were among the considerations.


In a statement posted on X (formerly Twitter), UAW President Shawn Fain called the decision "an embarrassing and thinly veiled threat by Ford to cut jobs."

"Closing 65 plants in the last 20 years was not enough for the Big Three, now they want to threaten us with closing plants that are not yet open," Fain said in the statement. "We're simply calling for a just transition to electric vehicles and instead Ford is doubling down on its race to the bottom."

Because assembling electric vehicles requires significantly less labor than building gasoline-powered vehicles, the union worries that automakers' plans to eventually switch to all-electric lines will mean more job losses and smaller paychecks. In fact, job security has become an important issue in negotiations.

Some politicians have also attacked Ford's reliance on "Chinese technology" at the factory, Reuters reports, even though the factory was to be owned and operated solely by Ford.

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The plans called for the plant to operate as a wholly owned subsidiary of Ford Motor Co. but build batteries using the "know-how" and services of China's Contemporary Amperex Technology Co., or CATL. CATL, the world's largest battery maker, which also supplies batteries to Tesla.

The U.S. Congress last year passed $430 billion Inflation Reduction Act (IRA) legislation to restructure how tax credits for electric vehicles are allocated. Under the law, consumers who purchase an electric vehicle will be eligible for tax credits of varying amounts, depending on whether the vehicle itself, as well as its batteries and battery components, were manufactured and whether the battery minerals were mined in the United States.

The battery plant was planned to operate in addition to the plants in Kentucky and Tennessee that Ford announced in 2021. Ford is building those plants with SK Innovations, a South Korea-based company. Ford has said it plans to be able to produce 2 million electric vehicles worldwide by the end of 2026.

Electric carsFord