On Capital Markets Day, Ford model e Vice President of Electric Vehicle Manufacturing Lisa Drake said the electric vehicle battery supply chain “isn’t necessarily a limitation.” Because of the arrangements Ford has made, including the new lithium deals revealed Monday, the automaker is sticking to its 2 million EV run rate target.
Earlier today, Ford detailed the automaker’s plans to achieve an 8% profit margin by the end of 2026.
The plans included continuing to implement what it learned from the first generation of electric vehicles — the F-150 Lightning and Mustang Mach-e — to cut costs.
For example, Ford says it has retooled its assembly plant in Oakville, Ontario with an investment of C$1.8 billion (about $1.3 billion), turning it into an electric vehicle and battery manufacturing hub. The facility will build its own next-generation electric vehicles, including an electric pickup and a three-row SUV.
This shift resulted in no operators in the main body shop, a 25% smaller paint shop, 25% smaller final assembly, and a 60% reduction in battery pack labor using new processes and automation.
Although Ford is confident of achieving its profitability goals, some have questioned how the company plans to go from producing nearly 100,000 electric vehicles in 2022 to 2 million by the end of 2026. With interest in electric vehicle battery supply growing across the industry, Ford discussed how you plan to beat it.
Ford is not interested in supplying electric vehicle batteries in the short term
On Wednesday, several Ford Model e partners discussed the automaker’s raw materials strategy.
One of the biggest concerns was lithium supplies. Erica Ranestad, who leads the lithium team at Ford, explains that while there is ample supply, time will be the real bottleneck.
Ford announced earlier today that it has secured 90% of the nickel and lithium needed to support its goal of building 2 million electric vehicles annually by 2026. The company revealed deals with three lithium industry leaders in Albermarle, Nymasca Lithium and SQM.
Albermarle supplies more than 100,000 metric tons of battery lithium to support the production of three million electric vehicles. The deal is part of a five-year agreement starting in 2026.
Meanwhile, Nemaska plans to supply 13,000 tons of lithium hydroxide annually over 11 years for a total of 143,000 tons.
Rather than chasing bigger batteries for greater range, Ford says it’s all about efficiency. It’s focusing on smaller batteries, using fewer resources, and with better performance. The automaker gives an example of its LFP battery. In all, Ford says it has secured 240 GWh of battery cell capacity globally to support its initiatives.
Ford is confident it can lower battery material costs as we go forward for several reasons. First, the company now plays a role in the supply chain and will have complete visibility into costs. What’s more, Ford is signing large forward-looking contracts for electric vehicle battery materials, which gives it a pretty good idea of what you can expect.
With different battery chemistries in the future, Ford will have the flexibility, if necessary, to work around higher material prices.
When asked if there were any concerns about a shortage in the EV supply chain, Drake responded by saying, “It’s not necessarily a limitation.” [referring to lithium] Because we have arrangements,” but the domestic United States is most anxious going forward.
Although Ford reserves its share of the resources needed to reach the 2-million-EV run-rate, Drake says it “doesn’t ultimately solve a closed-loop circuit.” Drake says recycling capabilities in the US would be the next big step we need to take to support electric vehicle rollouts in the future.
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