Who Needs an EV Battery Plant? Not Ford
Ford sees no advantage in building its own gazillion-dollar battery plant, at least for now.
Instead, the company intends to play the field for the lowest cost and best technologies to power its upcoming electrified cars.
Ford makes its position crystal clear, starting with outgoing CEO Jim Hackett. “There’s no advantage in ownership in terms of cost or sourcing,” he declares, pointing to the industry’s fast-growing capacity among existing battery cell makers based in China, Japan and South Korea.
2021 Mustang Mach-E (Image: Ford)
Hau Thai-Tang, who heads Ford’s product development and purchasing, says a company-owned plant can’t be justified financially at annual production levels below 100,000-150,000 units.
Ford expects to get there at some point, and it might change its mind about having its own battery factory when it does.
In the meantime, Ford’s first truly competitive EV—the Mustang Mach-E crossover—will debut later this year. But the company doesn’t expect to make more than 50,000 of the cars in 2021. Why? Ironically, it’s because supplies of battery cells are tight right now.
Buy vs. Make
Having your own factory to make cells—the building blocks of battery packs—would cure the supply issue, analysts point out. But Ford is adamant that it makes no sense to invest billions of dollars to make cells when the technology behind the devices is evolving so quickly.
Thai-Tang notes that Toyota learned that lesson the hard way. The company invested heavily in capacity to make nickel-metal hydride batteries just as the industry began a rapid shift to more powerful lithium-ion chemistries. As a result, Toyota was forced to play catch-up.
Now battery developers are touting more powerful, solid-state cells as the next big thing. Solid-state batteries could begin to show up in EVs a few years from now. Ford, which says the EV market will take many years to develop, says being able to tap the latest technologies will give it a product performance edge in the marketplace.
Tesla’s battery plant in Nevada (Image: Tesla)
Tesla doesn’t see it that way. Of course, its product lineup is 100% battery powered, so guaranteeing plenty of capacity is essential to its business. The carmaker, partnering with Panasonic, began building the first phase of its $5 billion battery Gigafactory in Nevada in 2014.
Tesla, which made 35,000 EVs in 2014, was targeting annual capacity by this year sufficient to power 500,000 EVs. The company’s sales in 2019 were about 368,000 cars. Tesla CEO Elon Musk has been predicting that Tesla would achieve annual sales of 500,000 units for two years. He currently forecasts volume of as much as 400,000 units this year, in spite of the COVID-19 pandemic.
Meanwhile, Tesla is steaming ahead with a cheaper and more durable battery, dubbed Roadrunner, that it hopes to launch by early 2021.
GM and LG Chem
General Motors and its 50:50 partner LG Chem are equally bullish about the giant, $2.3 billion battery plant they are building near Lordstown, Ohio. The facility will have annual capacity of 30 gigawatt-hours, about the same as Tesla’s battery plant.
Cadillac Lyriq (Image: GM)
GM, too, is touting next-generation battery technology. The carmaker boasts that the soft-pouch Ultium battery cell it plans to produce in Ohio is 60% more powerful than the lithium-ion devices used in its Chevrolet Bolt electric sedan.
The battery is expected to debut in the Cadillac Lyriq crossover that GM unveiled last week.
So where does this leave Ford? Analysts see plenty of merit on both sides of the build-vs.-buy debate about EV batteries.
Ford is banking on the conviction that staying flexible, at least while its EV sales volumes are relatively low, makes good sense. Besides, the company can always change its mind when it—and the rest of the industry’s EV contenders—gets a better sense of the trajectory of consumer demand for electrics.
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