Ford Motor Co. (F) has serious headwinds. The UAW strike will increase wages, adding more costs to the automotive firm. Tesla (TSLA) has full command of the EV market. Not a single firm may hurt Tesla’s moat. In response, Ford must stop the billions in losses from the EV business. That starts with pausing construction for a battery plant in Michigan.
Ford announced that it halted its plant construction last Monday. It said it would limit spending and pause work until it is confident that it may operate the plant competitively. This plant would have employed 2,500 staff once it started producing LFP batteries starting in 2026.
Ford is in a bind. It cannot pay sharply higher wages and open the EV plant. To at least break even, it will halt the project first. The next step is finding staff resources that will work at a lower cost. For example, Ford could move its production to Mexico.
In the longer term, Ford may re-evaluate its plant project located in Marshall, Michigan. The union has too much power to force the firm to pay wages at levels it cannot afford. Unable to compete against Tesla, Ford will have tough decisions ahead.
Investors should think twice before buying Ford shares.
