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July 21, 2022updated 22 Jul 2022 11:15am

Ford announces new EV materials supply deals

The automaker expects a compound annual growth rate for EVs to exceed 90% through 2026

By Graeme Roberts

Ford on Thursday announced new sourcing battery capacity and raw materials sourcing as it targeted annual “run rate” of 600,000 electric vehicles by late 2023 and two million by the end of 2026.

The automaker expects a compound annual growth rate for EVs to exceed 90% through 2026, more than double forecasted global industry growth.

Ford plans to invest US$50 billion in EVs through 2026, targeting total company adjusted EBIT margins of 10% and 8% EBIT margins for EVs by 2026.

The company is developing a new EV supply chain and plans for half its global production to be EVs by 2030 and carbon neutrality world wide no later than 2050.

It plans to reach a 600,000 global EV run rate by late 2023 with: 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 and 30,000 units of a new SUV for Europe, whose run rate will significantly ramp in 2024.

Ford is adding lithium iron phosphate (LFP) cell chemistry alongside existing nickel cobalt manganese (NCM) which creates more capacity for high demand products and is claimed to provide owners “many years of operation with minimal range loss”.

It also reduces reliance on scarce critical minerals such as nickel and, at current costs, brings a 10% to 15% bill of material savings versus NCM batteries.

The company confirmed it has secured 100% of the annual battery cell capacity needed – 60 gigawatt hours (GWh) – to support this 600,000 EV run rate by working with leading battery companies around the globe.

Ford announced that Contemporary Amperex Technology Co., Ltd. (CATL) will 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. Ford’s EV architecture flexibility allows efficient incorporation of CATL’s prismatic LFP cell-to-pack technology, delivering incremental capacity quickly to scale and meet customer demand.

Ford said it was using 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.

Long time supplier LGES has boosted output quickly and doubled its capacity at its Wroclaw, Poland, factory to support incremental NCM cell production for the Mustang Mach-E (built in Mexico) and E-Transit (Turkey and US) models.

SK On has also installed capacity to supply increased production of high volume F-150 Lightning and E-Transits through late 2023 – boosting NCM cell production beyond earlier planned levels from its Atlanta factory and providing new battery cell capacity in Hungary.

Driving to 2 million EVs by late 2026

The company said it had now sourced 70% of the battery cell capacity it needs to support an annual global run rate of more than 2 million EVs by late 2026.

Ford and CATL, the world’s largest battery producer, have signed a separate non-binding MOU to explore a cooperation for supplying batteries across China, Europe and North America.

Ford also announced it plans to localise and use 40 GWh of LFP capacity in North America starting in 2026.

The company intends to use this additional capacity to complement three previously announced battery plants in Kentucky and Tennessee that are part of the BlueOval SK joint venture which was formed officially last week. Ford has signed an additional MOU with SK On as well as Koc Holdings to create a joint venture in Turkey for expanded battery capacity there.

To support its joint ventures, Ford is direct sourcing battery cell raw materials as well.

“Our team has been actively engaged with partners in the US and around the world,” said Lisa Drake, Ford Model e vice president, EV industrialisation. “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 our ESG expectations and underpin our plan to bring EVs to millions.”

Today, the company also announced it was working with major mining collaborators and has sourced most of the nickel needed through 2026.

Ford has signed non-binding MOUs with Vale Canada to explore potential opportunities across the EV value chain; with 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 the automaker with rights to the equivalent of 84 kilotons per annum (ktpa) of nickel; with BHP for nickel supply from its Nickel West operations in Australia. The targeted multi-year agreement could start as early as 2025 and may involve additional commodities later.

Locked in lithium

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 aluminium business and includes a potential opportunity on copper.

Ford also continues working to localise 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 for lithium carbonate from its 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; and Syrah Resources and SK On have signed a non-binding MOU to secure offtake for natural graphite from its processing site in Vidalia, Louisiana.

“It’s a very competitive landscape. These collaborators see value in the strong demand we have created with exceptional products and the stability we can bring to these relationships,” Drake said. “We are excited to work with them – and others we haven’t yet announced – to build this new global supply chain.”

To further stimulate demand, Ford is working to make EVs accessible to millions, addressing barriers to entry such as charging, cost and improving the EV customer purchase experience.

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