Drake said Ford is not necessarily concerned about the Chinese government interfering with the deal, saying the companies “certainly thought through that and those are provisions,” including optionality in the contract.
The expected announcement of the contract between Ford and Contemporary Amperex Technology Co., or CATL, follows Virginia Governor Glenn Youngkin’s revelation that he was removing the state from a competition to attract the proposed Ford facility due to its ties to the Chinese corporation.
Ford’s vice president of EV industrialization, Lisa Drake, said that the carmaker would control the new factory via a fully owned company as opposed to managing it as a joint venture with CATL, as numerous automakers, including Ford, have done with non-China partners in the United States. She said that the business would license the technology and technical skills from CATL.
“LFP technology is already present in the United States. It’s in a variety of consumer electronics gadgets and another OEM product, but it’s always imported,” Drake said during a media call. This effort aims to mitigate this risk by expanding the capacity and competence to grow this technology in the United States, which is within Ford’s control.
Bill Ford, chairman of Ford, said that CATL would help the manufacturer “get up to speed so that we can manufacture these batteries ourselves.”
During a Monday ceremony announcing the investment, he said, “Manufacturing these new batteries in the United States will allow us to produce more EVs more quickly and eventually make them more affordable to our consumers.”
Ford refused to comment on the financial terms of CATL’s license deal.
According to the Detroit carmaker, the facility will open in 2026 and employ around 2,500 employees. It will manufacture lithium iron phosphate batteries, or LFP, instead of the more expensive nickel cobalt manganese batteries that are already in use. Ford will be able to increase EV production and profit margins with the help of the new batteries, which are anticipated to provide distinct advantages at a cheaper price.
In order to lower the quantity of cobalt required to produce battery cells and high-voltage battery packs, Ford is incorporating LFP batteries into a fraction of its cars, similar to Tesla.
Jim Farley, the chief executive officer of Ford, said on Monday that the automaker’s batteries would be among the least costly to manufacture, claiming improved pricing for consumers and more profitability.
Drake said that Ford is not very worried about the Chinese government meddling with the sale, stating that the firms have “definitely thought through that and there are contingencies” in the contract.
Instead of a joint venture, Ford’s ownership may help it avoid extra political scrutiny and qualify for federal EV tax incentives.
Ford’s EV unit’s chief customer officer, Marin Gjaja, said that once manufacturing at the Michigan factory starts, the cars are likely to qualify for half of the up to $7,500 in federal tax credits for EV buyers. He said that they must fulfill local manufacturing criteria but not material sourcing regulations for batteries.
President Joe Biden signed the $430 billion Inflation Reduction Act in August, that included stricter consumer tax credits of up to $7,500 for the purchase of an electric vehicle (EV) as well as significant incentives for companies to produce batteries domestically in an effort to wean the U.S. auto industry off its dependence on China for batteries.
Farley said the business has “absolutely” been talking to the Biden government about the factory, noting the IRA incentives to help with the American production of battery cells. He said that the economics of the IRA had a significant impact.
Ford anticipates that the manufacture of battery cells will be eligible for government subsidies of $35 per kilowatt-hour generated and $10 each module. The facility is anticipated to have the ability to produce 35 gigawatt hours (GWh) of LFP battery capacity.
Ford said before to the IRA that it will collaborate with CATL to investigate boosting battery packs for the electric Mustang Mach-E crossover in North America this year. Drake said that it was part of Ford’s aim to develop 40 GWh of battery capacity, sufficient to power 400,000 Ford EVs.
In addition to Ford’s cooperation with LG Energy Solution and South Korea-based SK, which include a joint venture for twin lithium-ion battery factories in Tennessee and Kentucky, the new LFP factory will be constructed. These facilities are anticipated to come online between 2025 and 2026.
Ford expects to deliver 600,000 electric cars worldwide annually by the end of this year and 2 million by the end of 2026. The corporation hopes to have an adjusted profit margin of 8% for its EV business by then.
The manufacturer anticipates releasing the LFP batteries in the Mustang Mach-E later this year, followed by the F-150 Lightning the following year. It will get these batteries from CATL, according to the business.
Since 2019, Ford and its battery partners have reportedly announced expenditures totaling $17.6 billion in electric car and battery manufacturing in the United States. Ford, citing a “2020 independent analysis,” said that these investments are anticipated to generate over 18,000 direct employment and over 100,000 indirect jobs in Michigan, Kentucky, Tennessee, Ohio, and Missouri over the following three years.
Governor Gretchen Whitmer of Michigan referred to the investment as a “huge success” for the state, which has taken steps to entice further battery manufacturing after losing out on past multibillion-dollar investments.
Monday at the event, she said, “We are collaborating to create Michigan the new Silicon Valley.”