Ford to Buy EV Batteries from China’s CATL

Ford said it will buy lithium-iron (LFP) batteries for its North American electric pickup trucks and SUVs from China’s CATL, the world’s biggest battery producer. Ford also looks for a broader alliance with CATL and an array of separate deals to secure battery and battery materials.

The company wants to secure LFP batteries from a new 40 GWh factory in North America starting in 2026. It did not reveal if that factory would be built by CATL. It was reported in May that CATL was looking for battery production sites in the United States to supply Ford and BMW.

Ford’s decision to use LFP batteries in its best-selling North American EVs is the latest sign that lithium iron’s lower cost is worth the trade off in range. Ford said the chemistry can cut material costs by 10-15%. Tesla offers LFP batteries in some of its lower priced Model 3 models.

Although Ford wants to source more batteries and battery materials from North America, it acknowledges that it’s hard work to localize all of the supplies.

Ford said it also has agreed with CATL to explore using the Chinese company’s batteries in Ford vehicles sold in the United States, Europe and China.

Ford’s agreements with CATL are part of its effort to speed up battery capacity and raw materials supply. The automaker has recently made a number of other agreements, including to explore buying lithium from Australian mining giant Rio Tinto, and nickel from Vale SA’s units in Canada and Indonesia, China’s Huayou Cobalt and BHP.

Some of Ford’s metals agreements are linked to projects that will not start production until later in the decade.

Investors are concerned that supplies of battery materials and battery-making capacity will not keep up with demand for EVs, leaving some automakers short in the later years of this decade.

Ford said it has now sourced about 70% of the battery capacity it needs to support its goal of building more than 2 million EVs worldwide by late 2026.

Ford’s agreement with CATL comes at a time when the U.S. government has been increasingly concerned about the auto industry’s reliance on China as the dominant source for battery materials and battery cells. For the Chinese battery maker, the deal is a significant win.

Lithium-iron batteries typically deliver less driving range than comparable batteries that use nickel and cobalt, and until recently, automakers had stuck with more expensive nickel-cobalt chemistries for the U.S. market, where longer driving range is a key competitive measure.

Lower-cost batteries could allow Ford to drop prices, or boost profit margins.

Although Ford said it is aiming for 8% pretax profit margins on its EVs by 2026, it is still well short of the 14.6% operating margin Tesla reported Wednesday for the second quarter.

Ford is aiming to expand its annual EV production rate to 600,000 vehicles globally by late 2023, and more than 2 million by the end of 2026. In March, Ford boosted its planned spending on EVs through 2026 to $50 billion from its prior target of $30 billion.

The company is also working with LG Energy Solution and its long-time battery partner SK Innovation.

Need to access the insight?

Start your 7-day free trial now

Need to access the insight?

Start your 7-day free trial now

Need to access the insight?

Start your 7-day free trial now

Do you need to access special insights on this matter?

Start your 7-day free trial  and become a member today

Subscribe to Top Insights Today

Subscribe to Executive Newsletter Top Insights Today

The Executive Newsletter -Top Insights Today- puts global business events in perspective through special insights

Join the ranks of global executives and subscribe to Top Insights Today

Top Insights Today covers insights on energy, clean-tech, oil&gas, mining, rare earths, defense, aviation, infrastructure, manufacturing, electrical vehicles, big-tech, finance and politics of business

By clicking subscribe you agree to our privacy and cookie policy and terms and conditions of use.

Read more insights

U.S. Considering Windfall Profit Tax on Fossil Fuel Companies

The Biden Administration is contemplating a proposal that would tax oil and gas producers’ windfall gains in order to provide consumers some relief on high energy prices.

Toyota to Make $1.8 Billion EV Investment in Indonesia

Indonesian Economy Ministry announced on Wednesday that Toyota plans to invest 27.1 trillion rupiah ($1.80 billion) in Indonesia for the next five years to produce electric vehicles (EVs). Indonesia has been looking to become a global hub for producing and exporting EVs through processing its rich nickel supplies used in lithium batteries. 

Oil Majors Make Peace with Nigerian Government After Reaching New Production Deals

Four oil majors, Shell, Chevron, ExxonMobil and Equinor, have agreed to terminate U.S. lawsuits that sought a multi-billion dollar arbitration against Nigeria’s state-owned oil company, after reaching new deepwater oil production sharing agreements. Two federal judges granted requests by the four oil companies to end their lawsuits so that the agreement could take effect, which is expected by late October. 

Stay informed

error: This content is protected !!