Ford cancels plan for $1.6bn Mexico car plant after Donald Trump pressure in favour of Michigan expansion

The President-elect has been urging firms to keep jobs in the US

Ford is to invest $700m in a Michigan plant to build new electric and autonomous vehicles (AP)

Ford is cancelling plans to build a new $1.6bn factory in Mexico and will invest $700m in a Michigan plant to build new electric and autonomous vehicles.

The Associated Press said that Ford still plans to shift production of the Focus small car to Mexico and will make the car at an existing plant.

President-elect Donald Trump has been pressuring Ford to keep production of the Focus in the US.

The company made the announcements Tuesday at a factory in Flat Rock, Michigan, near Detroit. The factory will get 700 new jobs.

Among the new vehicles it will make are a fully electric small SUV with 300 miles of range.

Ford also plans a gas-electric hybrid version of the F-150 pickup.

Ford CEO Mark Fields said the company decided in recent weeks not to build the plant because of declining demand for small cars in the US.

It will still move production of the Focus to Mexico, but that will go to an existing plant in Hermosillo. The Michigan plant that currently makes the Focus will get new products next year.

Mr Fields said Ford will invest $700m in the Flat Rock plant to make hybrid, electric and autonomous vehicles.

It will also hire around 700 workers. In announcing the Michigan expansion, Mr Fields noted Trump's promise to make the U.S. more competitive by lowering taxes and easing regulations.

“This is a vote of confidence for president-elect Trump in some and of the policies he may be pursuing,” he said.