By on December 10, 2009

Why no, Jay, I'm not from Michigan. I was built by Magna! (courtesy:wired)
Zacks Investment Research reports that Ford will invest $500 million in Michigan for developing and building batteries for their hybrid and electric vehicles. In return, they have asked the Michigan government for a tax break between $85 to $120 million. Michigan haven’t confirmed whether they’ll give this tax break, which is handy because Ford have indicated that they will look elsewhere if the tax break isn’t given. This investment will create 1000 jobs. Each job will cost at least $85000? Shocking!

Ford have decided that battery development is a key job which needs to be developed in-house. Which is bad news for Delphi, since they currently make Ford’s batteries for them. Just what they needed as they were coming out of bankruptcy. This plant will supply batteries for the Transit Connect EV, the Focus EV and hybrid versions. Ford are choosing to manufacture Lithium Ion batteries instead of Nickel Metal hydride ones. Not only are they smaller and lighter, they can be tuned to increase power to further acceleration. It’s nice to see that Ford are creating new jobs, but as with Nissan and their Leaf production in Tennessee, the amount of tax money per job is phenomenally high. Is it worth it?

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16 Comments on “Ford: In-House Batteries Aren’t Cheap. For Taxpayers...”


  • avatar
    dwford

    $85,000 per job is a lot cheaper than the Stimulus Plan so far!! And it seems that these jobs will replace jobs currently in Mexico, which is a good thing. It is also nice to see Ford keeping the technology and manufacturing capability in house, vs relying on a supplier.

  • avatar
    tparkit

    Strange proposal to the Michigan government. Unless Ford agreed otherwise as part of receiving its aid package from Washington, Ford should set about methodically extricating itself from Michigan.

    • 0 avatar
      ash78

      It’s an interesting contrast…while Nissan may be making superficially stupid moves (Leaf), they are building a core infrastructure or critical mass of plants and workers. It may not pay off immediately, but they’re planning ahead.

      OTOH, I give Ford 10 more years in Michigan, depending on how quickly GM falls apart. Once the core base of workers have moved or retired, what remaining incentive do they have to stay?

  • avatar
    panzerfaust

    Its very entertaining to watch a local government that has no qualms about spending tax dollars directly to create jobs, squrim and wring its hands over creating jobs through tax incentives.  

  • avatar
    Potemkin

    $85,000 for a $40,00 job, duh!   The kind of thinking we have come to expect from politicians spending our money.

    • 0 avatar
      Greg Locock

      So, in your experience roughly how much do states in the USA pay in incentives per job? In Oz anything less than 100 000 is unusual. Also note that this is foregone income for the state rather than an out and out bribe.

      Economically it makes sense to do this, the income from the new job is mostly spent in-state.

    • 0 avatar
      PeteMoran

      @ Greg Locock
       
      The problem being, I think we past the “zero sum” point a decade ago.

  • avatar
    NN

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  • avatar
    NN

    yeah…my previous comments weren’t working out well…anyways, interesting that Michigan is paying so much for the jobs.  Even more interesting is that Ford is getting the rest of the money from the government at preferred rates.  So the entire thing is likely subsidized, and spending another’s money never leads to the type of hard scrutiny on bottom line expenses and margins as spending one’s own.

  • avatar
    basho

    Only someone from outside of Michigan would think Ford would leave Michigan.  Ford made Detroit.  Visit Dearborn Michigan and see what it looks like when a company practically owns an entire city. 

  • avatar
    carguy

    Governments subsidizing some aspect of the energy industry is nothing new. No one seemed to mind when the previous administration gave billions of dollars worth of tax breaks to oil, gas and coal companies. This is more of the same just to a different end of the market.

  • avatar
    colin42

    I had an interesting discussion with a battery guy yesterday about the concerns of transporting lithium batteries (especially on aircraft) due to the potential of having a cell short, catching fire & sending the rest of the cells up in smoke.
    http://findarticles.com/p/articles/mi_m0UBT/is_29_18/ai_n6280925/

    http://www.cbsnews.com/stories/2009/10/07/ap/politics/main5370336.shtml

    This brings up an interesting issue about lithium batteries in vehicle accidents! Perhaps this is the real reason Toyota are sticking with Nickel Metal hydride?

  • avatar
    Z71_Silvy

    So this is what our 5.9 BILLION is paying for?  Dead end technologies like hybrids and batteries?
     
    Just give us what we want…diesel!

  • avatar
    mcs

    Here’s an interesting post on lithium battery safety for rc models.
    http://www.rcgroups.com/forums/showthread.php?t=209187

    I’m curious as to how the insurance companies and body shops will handle these cars when they’ve been involved in a collision. If the collision is severe enough to potentially cause internal battery damage, do they automatically replace the packs? What does that do to the insurance costs of one of these cars – like the Volt? If they don’t automatically replace them, who gets to be the lucky person that tests the battery after the crash?   


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