LG shifting Ford Mustang Mach-E battery production to Michigan

• Ford Mustang Mach-E battery production will move from Poland to Michigan
• The move will translate into federal EV tax credit eligibility
• The Ford Mustang Mach-E is assembled in Mexico

LG Energy Solution will shift production of batteries for the Ford Mustang Mach-E from Poland to Michigan in 2025, checking a box for federal EV tax-credit qualification.

The Mach-E fell off the short list of EVs that qualify for the $7,500 tax credit this year when tougher rules for the origin of battery components and critical minerals were phased in. To qualify for half the credit amount ($3,750), the rules stipulate 50% of critical mineral content in batteries be North American-sourced, or be from countries in which there’s a free-trade agreement in place.

The other $3,750 is based on North American sourcing of 60% of battery parts and North American assembly of the vehicle itself. The Mach-E is currently manufactured in Mexico, so it meets the latter requirement. For the rest of the lineup, the Ford F-150 Lightning currently qualifies for the full $7,500 credit, while the Escape Plug-In Hybrid qualifies for a $3,750 credit.

LG currently manufactures EV batteries in Holland, Michigan, but the battery supplier and Ford had planned another facility in Marshall to manufacture lithium iron phosphate (LFP) batteries, which Ford previously touted as a key to EV affordability. However, Ford paused construction on the $3.5 billion factory in late 2023.

Around the same time, Ford also delayed construction on one of two EV battery plants located on a common site in Kentucky, citing lower-than-expected demand for electric vehicles. The two plants comprise the Blue Oval SK Battery Park, a joint venture with battery supplier SK On financed with part of a $9.2 billion government loan. Construction work on the second plant was not affected.

Ford CEO Jim Farley said in 2021 that the automaker was pursuing projects like this because more U.S. battery production would ensure stability of battery supplies. The move will also keep carbon emissions lower by powering factories with a domestic electricity grid that’s cleaner than that of China—currently the world’s largest battery manufacturer. The potential boost in sales from more EVs that qualify for a federal tax credit adds another incentive.