Ford Motors (NYSE: F) said on Thursday that they are on course to expand their electric vehicle (EV) production capacity to 600,000 vehicles a year by the end of 2023 by securing 100% of the battery supplies for the vehicles.
More Details Shared
The U.S. carmaker also added that it will be possible to produce 2 million EVs annually by 2026 thanks to the Chinese battery juggernaut Contemporary Amperex Technology, while also lowering the price of some of Ford’s most well-liked electric vehicles.
Ford held a presentation to reassure the investors and analysts who questioned whether the automaker company can provide the raw materials and batteries they need to meet their aggressive EV sales targets.
“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,” said in a statement by Ford CEO Jim Farley.
“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.”
The company already agreed with Contemporary Amperex, also known as CATL, for 70% of battery capacity, while also signing a non-binding memorandum to help them secure 100% needed to reach the target. CATL with supply Ford with lower-cost lithium iron phosphate (LFP) batteries.
Even though LFP batteries have a slightly lower range per pound than its existing batteries, they cost roughly 10% to 15% less and will lessen the company’s reliance on minerals like nickel, which are anticipated to be in short supply in the coming years.
Next year, Ford will start selling the Mustang Mach-E powered with the new LFP battery packs from CATL. The new batteries will also be available for the F-150 Lightning pickup truck model at the beginning of 2024. Ford will still rely on its current battery suppliers, LG Energy Solution and SK On of Korea, to help it accomplish its production goals for late 2023.
Agreement With Rio Tinto on Batteries
Ford also announced it reached an agreement with Rio Tinto to create more secure and sustainable supply chains for battery and low-carbon materials – the likes of aluminum, lithium, and copper – that will be used in EVs.
The partnership will allow Rio Tinto, a leading mining and metals company, to try and fulfill its promise to decarbonize value chains and will aid in the transition to a net-zero future. The non-binding agreement will make Ford Rio Tinto’s foundation customer for the Rincon lithium project in Argentina, in order to support its production of electric vehicles.
For Ford to fulfill its obligation to the First Mover’s Coalition, the companies will collaborate to increase the supply of low-carbon aluminum for use in Ford vehicles, including metal produced using the zero carbon ELYSISTM smelting technology.
“This is a powerful example of how Ford’s proven scale and industrial expertise can be leveraged to accelerate the shift to EVs,” said Ford Chief Industrial Platform officer Hau Thai-Tang.
Rio Tinto is already supplying Ford with aluminum used for the well-known all-aluminum body pick-up truck F-150. The high-strength aluminum alloys allow the truck to tow heavier loads, and accelerate quicker due to its lighter weight. The new agreement will expand on this deal in order to try and create Ford’s next-generational full-size electric truck.
Rio Tinto Chief Commercial Officer Alf Barrios also commented:
“We are excited to work with Ford to support the transition to net zero by supplying a range of materials it needs for electric and lower-carbon vehicles and advance our commitment to work with customers to decarbonize our value chains. Rio Tinto is uniquely positioned to work with companies like Ford to develop more sustainable, traceable, and secure supply chains.”
In addition, Rio Tinto’s presence in North America will help Ford and Rio Tinto create safe domestic supply chains for other important commodities for the energy transition, such as copper produced with a low carbon footprint.
Summary
Ford shares are up over 5% this week as investors generated more positives than negatives from this week’s presentations about Ford’s transition to EVs.
