Ford's EV Future Hinges on Washington: How Tax Reform Could Upend Michigan's Battery Plant

The $3.5 billion Ford Motor Co. electric vehicle (EV) battery plant in Marshall, Michigan, stands as a symbol of U.S. ambitions to dominate the EV market. But its fate now hangs on Capitol Hill. A proposed House tax reform bill threatens to strip the facility of critical tax incentives if finalized, upending Ford's EV strategy and casting doubt on the broader viability of EV investments in America.

The Marshall Plant: A Policy Experiment Under Siege

The Marshall plant, which employs 1,700 workers and is 60% complete, relies on battery technology from China's Contemporary Amperex Technology Co. (CATL). This partnership is now a liability: the House bill would eliminate federal tax credits for EVs using batteries made with Chinese technology after 2031. Ford's business case for Marshall was built on retaining those credits, which were projected to offset costs and support production of 230,000 EV batteries annually.

But the Senate's pending review of the bill—scheduled for June—has created a high-stakes waiting game. If the tax credit exclusion passes, Ford could lose up to $7,500 per vehicle in federal incentives, gutting margins. “This is about more than one plant—it's about whether U.S. automakers can compete globally while adhering to domestic content mandates,” said Bill Ford, the company's executive chair.

The Policy Risks: Costs, Demand, and Jobs

The tax bill's provisions amplify three critical risks for Ford and the EV market:

1. Production Costs Rise
   The Marshall plant's use of CATL's lithium-ion expertise is non-negotiable for high-density battery cells. Shifting to U.S. suppliers would require time and capital Ford doesn't have. Even if it pivoted, escalating domestic content thresholds (reaching 100% U.S. battery components by 2029) would force costly retooling.

Ford's shares have underperformed peers amid this uncertainty, down 12% since January 2025.

1. Demand Erosion
   The bill also ends the $7,500 federal EV tax credit and imposes a $250 annual fee on EV owners for road repairs. This “EV tax” could deter buyers, squeezing Ford's EV sales. Analysts estimate losing the tax credit alone could reduce U.S. EV adoption by 15–20% through 2030.

2. Job Vulnerability
   Marshall's 1,700 jobs depend on the plant's viability. If tax credits vanish, Ford may scale back operations further or mothball the facility entirely. Michigan's revised incentive package—already cut after initial demand forecasts failed—leaves the state with little leverage to retain investment.

The Investment Dilemma: Hold or Exit?

The Senate's June vote creates a binary outcome for Ford investors:

• If the Bill Passes: Ford's stock could plummet as the Marshall plant's economics unravel. EV demand declines and production costs rise could force the company to pivot suppliers, delaying its 2030 goal of selling 2 million EVs annually.
• If the Bill Fails: Ford's shares may rebound, as the Marshall project regains its incentive-driven momentum. The plant could become a linchpin in U.S. EV supply chains, bolstering Ford's position against rivals like Tesla.

The data shows how critical tax incentives have been to EV adoption—removing them could reverse progress.

Conclusion: Proceed with Caution

Investors must weigh Ford's long-term EV potential against immediate policy risks. The Marshall plant's 60% completion offers some resilience, but the Senate's decision could redefine its fate—and Ford's stock—within weeks.

Recommendation: Avoid new positions in Ford until the Senate vote clears. If the bill fails, the stock could rebound sharply. If it passes, consider shorting Ford or shifting to EV competitors with stronger domestic supply chains. The path forward is clear: policy uncertainty demands patience, not commitment.

The Marshall plant is not just a factory—it's a referendum on whether the U.S. can reconcile national security with economic growth. For investors, the answer may come down to a single vote in June.

Disclosure: This analysis is for informational purposes only and not financial advice. Always consult a professional before making investment decisions.