Ford has released details of its planned $50 billion investment in electric vehicles between now and 2026, when it expects to be selling 2 million EVs a year. To get there, it will need lots and lots of batteries. In a press release this week, the company says it has secured commitments from 3 battery manufacturers that will allow it to build 600,000 electric vehicles a year by the end of 2023. It also says it has secured 70% of the supplies it will need to get to the 2 million mark by 2026. Ford expects half of its global sales will be battery-electric vehicles by the end of this decade.
A compound annual growth rate for EVs should exceed 90% through 2026, more than double the global industry growth that industry analysts predict will happen. “Ford’s new electric vehicle lineup has generated huge enthusiasm and, and now we are putting demand the industrial system in place to scale quickly,” says Jim Farley, Ford’s president and CEO and president of Ford Model e. “Our Model e team has moved with speed, focus and creativity to secure the battery capacity and raw materials we need to deliver breakthrough EVs for millions of customers.” Model e is the name Ford has assigned to the electric vehicle portion of its business.
Ford plans to reach a 600,000 global EV run rate by late 2023 with the following EVs:
- 270,000 Mustang Mach-Es for North America, Europe and China
- 150,000 F-150 Lightnings for North America
- 150,000 Transit EVs for North America and Europe
- 30,000 units of an all-new SUV for Europe, whose run rate will significantly ramp in 2024
A Tale Of 3 Battery Manufacturers
Ford is relying on battery supplies from three manufacturers to reach its 2023 sales goal. SK On, a component of SK Innovation, is building three new factories in Kentucky and Tennessee. It has also increased NCM battery cell production at its factories in Atlanta and in Hungary to support the scaling of Ford’s high-volume F-150 Lightning and E-Transits through late 2023. Long time supplier LG Energy Solution has also scaled up quickly to double Its production capacity at its factory in Wroclaw, Poland, factory to supply NCM cells for the Mustang Mach-E and E-Transit models.
The next part of the Ford press release is a surprise. It says it will source LFP battery packs from CATL for Mustang Mach-E models in North America “starting next year as well as F-150 Lightnings in early 2024. Ford’s EV architecture allows flexibility efficient incorporation of CATL’s prismatic LFP cell-to-pack technology, delivering incremental capacity quickly to scale and meet customer demand.”
Just a few days ago, we reported that CATL is exploring the possibility of building a battery factory in Mexico or the US — or both — as it seeks a way to break into the American markets. Note the Ford press release mentions CATL supplies from “North America” and not from the US. That may be a clue that CATL is leaning toward a factory in Mexico, which would partially insulate it from US trade policies designed to punish Chinese companies. Ford also says that CATL will supply batteries for cars intended for the Chinese and European markets.
Ford is also taking steps to source critical battery materials like lithium, copper, aluminum, graphite, and nickel directly from global suppliers like Rio Tinto. “Our team has been actively engaged with partners in the United States and around the world,” says Lisa Drake, Ford Model e vice president. “We will move fast in the key markets and regions where critical supplies are available, meeting with government officials, mining companies and processors and signing MOUs and agreements that reflect Ford’s ESG expectations and underpin Ford’s plan to bring EVs to millions.
“It’s a very competitive landscape. These collaborators see value in the strong demand we have created with exceptional products like Mustang Mach-E and F-150 Lightning and the stability we can bring to these relationships. We are excited to work with them — and others we haven’t yet announced — to build this new global supply chain for Ford.”
Supply & Demand
Ford’s market research shows demand for EVs is growing. For the first time, the majority of consumers who intend to buy a car in the next two years say they will choose an EV or hybrid vehicle. That’s up 11% from last year and 22% from 2020, according to research published by EY. Most of that increase is for full EVs. Among commercial owners who don’t already deploy EVs, 60% of US fleet managers said in a Ford Pro survey they plan to add EVs to their operations within two years. (USPS, take note!)
Market reaction to F-150 Lightning and Mustang Mach-E is strong, bringing all-new customers to Ford, the company says. Mustang Mach-E shares the top spot in its segment for in-market vehicle shoppers’ favorable opinion, according to a Q1 Ford study, while the F-150 Lightning’s favorable opinion was second only to the F-150 powered by an internal combustion engine.
“This is our opportunity to win a whole new group of customers, building their loyalty and advocacy as we grow our market share,” said Marin Gjaja, Ford Model e chief customer officer. “We’re developing the digital and physical services and experiences those new customers expect when they purchase a product that to them is a new technology purchase. Our aim is to combine the convenience of digital shopping with Ford’s expertise, scale and the physical presence of our dealers to create the best possible experience for tomorrow’s EV owners.”
Here at CleanTechnica’s graphene and iridium world headquarters, we get to see a torrent of EV news from all over the world. Much of it is composed of equal parts promises and puffery. Ford, though, seems to stand out from the crowd. As a legacy automaker, it has the EV bit firmly between its teeth and is pushing boldly forward into the future with as much vigor as Volkswagen. There is a sense that Ford is fully committed to the electric car future and will do whatever it takes to get there.
Buried among all this latest news, however, is a cautionary tale about what the transition to EVs may mean for legacy automakers. Ford says it may eliminate 8,000 jobs on the conventional car side of its business, most of them salaried workers. Ford employs more than 133,000 people worldwide, so on a percentage basis, that’s not a huge change in the company’s workforce, but it’s a signal that the jobs of the future will be on the EV side of things.
The EV revolution will not happen without consequence. Corporations have a duty to see to it that those affected by the transition are treated fairly and offered opportunities for retraining so they can continue being productive members of society.
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