EVs are known for being fast, and Ford’s taking that same approach when it comes to making deals to ensure it has enough batteries to meet its end-of-2026 target of a run rate of 2 million electric vehicles annually.
The automaker expects to begin building EVs at a rate of 600,000 units annually by the end of 2023 with that rising to 2 million-vehicle run rate by the end of 2026. The move is part of its now $50 billion investment in electric vehicles.
The company plans 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
Successfully scaling up the run rate is important as the company says compound annual growth for EVs will top 90% through 2026.
Ford is meeting the biggest challenge of ensuring it has enough batteries for all of those EVs by shoring up its supplier base, starting with the companies providing the raw materials for the batteries.
It’s also adding a new type of battery, lithium ion phosphate or LFP, which is less expensive, but also less powerful, than the current nickel cobalt manganese batteries the company uses. LFP batteries are 10% to 15% less costly than NCM batteries, the company noted.
New deals
The company announced early Thursday is has 100% of the battery cell capacity needed, 60 GWh, to meet its 600,000-unit target next year and 70% of the 2 million-unit goal three years later. To do that, it has been furiously inking new deals.
Ford told reporters it’s reached a deal with China’s Contemporary Amperex Technology Co. Ltd., or CATL, to provide full LFP battery packs for Mustang Mach-E models for North America starting next year as well as F-150 Lightnings in early 2024.
Lisa Drake, Ford Model e vice president, EV Industrialization, noted the company’s current EV architecture is flexible and allows efficient incorporation of CATL’s prismatic LFP cell-to-pack technology, delivering incremental capacity quickly to scale.
Ford also is leveraging its long-standing connection with LG Energy Solution (LGES) and its strategic relationship with SK On to meet its battery capacity target for late 2023. LGES has scaled quickly and doubled its capacity at its Wroclaw, Poland, facility to support incremental NCM cell production for Mustang Mach-E and E-Transit models. The E-Transit will not be converted for LFP batteries.
Additionally, SK On has installed capacity to support the scaling of Ford’s high-volume F-150 Lightning and E-Transits through late 2023 – scaling NCM cell production beyond earlier-planned levels from its Atlanta facility and providing new battery cell capacity from its Hungary operation.
Having the raw goods
Making sure the capacity to make the cells and cathodes is no good if the raw material suppliers aren’t in place. Ford’s hustled to make that happen too. Ford has signed non-binding MOUs with:
- Vale Canada Ltd.: To explore potential opportunities across the EV value chain.
- PT Vale Indonesia and Huayou Cobalt: For exploring a three-way nickel processing project and, separately, an off-take agreement with Huayou that collectively will provide Ford with rights to the equivalent of 84 kilotons per annum (ktpa) of nickel.
- BHP: For nickel supply from BHP’s Nickel West operations in Australia. The targeted multi-year agreement could start as early as 2025 and may involve additional commodities over time.
Ford also has locked several key lithium contracts. Beyond the recently announced key asset in Western Australia secured through Liontown Resources, Ford also has signed a non-binding MOU with Rio Tinto, exploring a significant lithium off-take agreement from its Rincon project in Argentina. This is part of a multi-metal MOU that leverages the scale of Ford’s aluminum business and includes a potential opportunity on copper.
Ford also continues working to localize processing of key battery materials in North America. To that end, the company is announcing:
- EcoPro BM and SK On: Have signed a non-binding Letter of Intent with Ford to establish a cathode production facility in North America.
- ioneer: Has signed a binding off-take agreement with Ford for lithium carbonate from ioneer’s Rhyolite Ridge project in Nevada to support EV production beyond 2025.
- Compass Minerals: Has signed a non-binding MOU for lithium hydroxide and lithium carbonate from its Utah operations on the Great Salt Lake.
- Syrah Resources and SK On: Have signed a non-binding MOU to secure off-take for natural graphite from its processing site in Vidalia, Louisiana.
Smaller is faster
The news came less than a day after scores of news reports, including TheDetroitBureau.com, said the company is preparing to shed as many as 8,000 employees in the near term. Drake declined to answer the question, although did say for the Model e part of Ford’s current organizational structure, “smaller is better.”
She noted, “The Model e team is a little bit smaller than you might think, that allows the agility and the speed that we needed,” adding later, “I will tell you most of those deals that you saw, we did not have a lot of meetings about them. There were probably four or five key decision-makers that needed to align. And we did that in days, not months.”
Speed is going to be critical going forward, especially on the supplier front. Drake noted they’ll need to scale up quickly and Ford isn’t just telling them what they need, the automaker is working with them directly to ensure they can meet the demand.
