Ford Starts the Hard Work of EV Battery, Raw Materials Security
Prepping for the EV near-term, Ford secures critical EV battery elements and adds lithium iron phosphate to its production-battery chemistry menu.
Along with painful jobs news related to its accelerated shift to EVs, Ford Motor Co. had what those scrutinizing electrification trends might deem as positive message when it said on July 21 that it has sourced the bulk of battery manufacturing capacity the company needs to meet its 2-million-plus global EV production target for 2026. It also confirmed “direct-sourcing” some crucial battery raw materials in strategically amendable locations that include the U.S., Australia and Indonesia.
Mixed with these announcements, however, was a report from a major news service that Ford plans to cut up to 8000 jobs in its Ford Blue business unit, the recently created entity responsible for "legacy” technology such as internal-combustion drivetrains and their related vehicle-engineering work. Ford did immediately confirm the jobs-cutting report, but CEO Jim Farley recently asserted that the company needed improved margins from legacy ICE vehicles to fund the costly transformation to electrification.
“Ford’s new electric vehicle lineup has generated huge enthusiasm and demand, and now we are putting the industrial system in place to scale quickly,” Ford president and CEO and president of Ford Model e, Jim Farley, said in a release. “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.”
New move to LFP
In a significant supporting play to its materials-sourcing actions, Ford also announced it will begin offering lithium-iron phosphate (LFP) batteries in addition to their standard lithium-ion, nickel-cobalt-manganese (NCM) chemistry for the Mustang Mach-E and new F-150 Lightning pickup truck (which is slated to make a big jump to production of 150,000 units for 2023). The Mach-E reportedly will offer LFP batteries by sometime in 2023 and the F-150 Lightning by early 2024.
Ford’s LFP battery cells – which are less energy-dense that the NCM chemistry and thus are projected to offer a reduction in driving range that Ford describes it as “minimal” – will be manufactured by Contemporary Amperex Technology (CATL). Ford said CATL will install 40 GWh of LFP production capacity in North America, although it will not be available until 2026. The company also indicated that some LFP battery capacity will be sourced in China.
The strategy to introduce LFP seems to indicate that Ford and other manufacturers are grappling to manage the delicate balance of EV cost versus American consumers’ driving-range expectations. Underscoring the extreme cost sensitivity of batteries in the current EV environment, Ford said in a release that LFP, “at current costs, brings a 10 to 15% bill-of-material savings for Ford versus NCM batteries.” EV-only Tesla already uses LFP batteries is some base versions of its Model 3 and electric pickup-truck startup Rivian confirmed that it also plans to leverage the less-costly LFP chemistry. Ford insinuated that adding LFP batteries shouldn't require much adaptation to existing vehicle designs, saying its "EV architecture flexibility allows efficient incorporation of CATL’s prismatic LFP cell-to-pack technology."
600,000 EVs in 2023
Ford detailed the EV production rates intended to be in place by 2023: 270,000 Mustang Mach-E; 150,000 F-150 Lightning; 150,000 Transit EVs for North America and Europe and 30,000 units of an unspecified SUV for Europe, totaling 600,000 units globally on the way to 2 million-plus by the end of 2026.
To that end, the company said it now has secured 100% of the 60 GWh cell-manufacturing capacity to support the production target of 600,000 EVs in 2023 and 70% of the battery capacity needed for 2026. Ford said its established relationship with LG Energy Solution (LGES) for lithium-ion batteries and a relationship with SK On are central to meeting the required battery capacity for late 2023. To assist in manufacturing of NCM cells needed for the Mustang Mach-E and the E-Transit, Ford said LGES doubled capacity at a plant in Poland, while for F-150 Lightning and E-Transit, SK On accelerated production laid out in previous plans from its facility near at Atlanta and is supplementing that with new production sourced from Hungary.
Global materials mix
Meanwhile, against a backdrop of heightening attention to raw-materials sourcing from politically and socially sensitive regions, Ford said it is “working with major mining collaborators and has sourced most of the nickel needed through 2026 and beyond.” That includes non-binding MOUs with Vale Canada Ltd for wide-ranging opportunities; PT Vale Indonesia and Huayou Cobalt for nickel processing project and the rights to the equivalent of an annual 84 kilotons (ktpa) of nickel; and BHP for nickel sourced from Australia.
“Our team has been actively engaged with partners in the United States and around the world,” said Lisa Drake, Ford Model e VP, EV Industrialization, in a release. “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.”
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