Ford Bets Big on Electric Vehicles

Ford Motor Company and manufacturing partner SK Innovation recently announced plans to build four new manufacturing plants in Tennessee and Kentucky to produce electric vehicles and batteries. The $11.4 billion investment is the largest single investment in Ford’s history. The investment is expected to create 11,000 jobs and poise Ford to be one of the largest manufacturers of electric vehicles with a target of producing 40-50% if its total volume to be fully electric by 2030.

To help bring Ford to their state, Kentucky is offering a $410 million incentive package, with $36 million going toward training employees to work in the high-tech plants. This incentive package is contingent on Ford meeting employment, wage, and investment targets. Ford also plans to spend $525 million over the next five years to train technicians to service their new electric vehicles.

Although some local citizens are concerned that the new facilities will change the character of their towns, many agree that the potential economic growth the plant will bring will be a good thing for their community.

Discussion/Questions

1. Explain the difference between the short-run and long-run. What are some of the fixed and variable costs Ford will face once the plants are up and running?
2. Describe how states competing to attract businesses through investment incentives can lead to a Prisoners’ Dilemma.
3. Explain how building the plants can lead to economic growth in the area? What other businesses might need to locate there?

Source: The Detroit News: Ford, partner to spend $11.4B on four new plants in Tennessee, Kentucky to support EVs, Photo by Dan Dennis on Unsplash