Ford is investing $3.5 billion to build a factory in Michigan that will produce low-cost batteries for some of its electric vehicles, the automaker announced Monday.

The facility will be located in the city of Marshall and initially create 2,500 jobs as it ramps toward the start of production in 2026.

It will manufacture nickel cobalt manganese (NCM) cells, which are cheaper to produce, but have a lower energy density than the lithium iron phosphate (LFP) chemistry currently used in all of Ford's electric models.

The project will be fully-owned by a Ford subsidiary, but will use technology licensed from Chinese battery company Contemporary Amperex Technology Co., Limited (CATL).

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The factory is one of three battery plants Ford has announced in the U.S. In January, Virginia governor Gov. Glenn Youngkin said he had removed Virginia from consideration for the NCM factory due to concerns about the Chinese connection, but Ford said no final decision had been made at that time.

"Today’s generational investment by an American icon will uplift local families, small businesses, and the entire community and help our state continue leading the future of mobility and electrification," said Michigan Governor Gretchen Whitmer. "Let’s continue bringing the supply chain of electric vehicles, chips, and batteries home while creating thousands of good-paying jobs and revitalizing every region of our state."

Lisa Drake, vice president, EV Industrialization Ford Model e, said the factory will have an 35 gigawatt-hour annual capacity, which will be enough to supply 400,000 electric vehicles.

Ford will begin using imported NCM packs supplied by CATL later this year in certain versions of the Mustang Mach-E SUV and next year in the F-150 Lightning before switching to the locally-produced packs.

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The NCM cells will replace the LFP technology that is used in entry level Standard Range models, while LFP will continue to be used in longer range and higher power applications, said Marin Gjaja chief customer officer Ford Model e.

The NCM batteries are also more durable, less susceptible to fire and can be regularly fast charged to 100% full, while LFP batteries are typically restricted to an 80% fast charge to protect them from damage.

A standard range Mustang Mach-E that can go 247 miles per charge currently starts at $47,495 while the lowest-priced F-150 Lightning Pro work truck rated at 240 miles of range is $57,869.

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Gjaja did not share specifics on pricing for the NCM-equipped vehicles, but said that the "intent is to make them more affordable and accessible."