Ford will own the new facility through a wholly owned subsidiary instead of operating it as a joint venture, which Ford has done with non-China partners.
GM is expected to continue with its plans to build the plant but is searching for another partner, according to a person familiar with the decision.
Stellantis said the plant, which produces the Jeep Cherokee SUV, will cease production as of Feb. 28.
The company will also announce it will be producing more technically advanced chips than originally proposed.
The new investment is expected to increase EV battery production by more than 40%.
Diablo Canyon was originally scheduled to be shut down in two phases in 2024 and 2025, but state lawmakers have voted to keep it open for five more years.
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