Ford CEO Calls for US Supply Chain for Battery Minerals to Address Production Constraints
As Ford positions itself as a major player in the electric vehicle (EV) market, the company's CEO, Jim Farley, highlights the critical need for a US-based supply chain for battery minerals. Farley identifies this constraint as the key obstacle to ramping up EV production, a necessary step to achieve the company's ambitious goal of producing two million EVs annually by the end of 2026.
EV sales in the US have already seen Ford jump to the second-largest EV maker behind Tesla, selling 61,575 electric vehicles in 2022 alone. However, the company's success has come at a price, with Ford estimating that its EV business unit, Model e, will lose $3 billion in 2023 after losing a combined $6 billion from 2021 to 2023.
Farley explains in an interview with Yahoo Finance that the constraint to EV production lies in the sourcing and production of critical battery minerals, such as lithium and nickel, which are mainly acquired from countries like South America, Africa, and Indonesia. To address this issue, Ford plans to localize the sourcing and processing of these minerals in North America, in line with the Inflation Reduction Act passed last August, which incentivizes such practices.
The US automaker is already manufacturing massive batteries of up to 140 kWh for its full-size electric truck, the F-150 Lightning. However, Farley highlights that developing smaller and more efficient models, such as the electric Maverick, could increase EV production capacity even further.
While the US government is offering grants and incentives to encourage automakers to keep raw materials within the country, the challenge remains, as even domestically mined materials are often sent to China for processing. China accounts for over 70% of the battery market, and major players like CATL are gaining momentum.
To tackle these issues, Ford is partnering with SK Innovation to build BlueOval City, its largest and most advanced EV complex to date. This initiative includes three new battery plants and a new EV manufacturing complex where Ford will produce its second-generation electric truck and EV platform, Project T3.
With the automaker's revolutionary "radical simplicity, cost efficiency, and quality technology" manufacturing process, BlueOval City is expected to begin production in 2025, with an annual EV battery production capacity of 129 GWh.
In conclusion, while battery constraints pose a significant obstacle to Ford's ambitious EV production goals, the company is taking necessary steps to localize the sourcing and production of critical minerals in North America and build advanced and efficient manufacturing complexes. As Ford and other automakers look to accelerate their EV production, developing a sustainable and localized supply chain for battery minerals will be key to success in the growing market.