While Ford has made extensive investments in electrification, including hybrids, plug-in hybrids and all-electric vehicles, one area it has not been involved in is the multibion-dollar cost of battery production by its competitors,media reported. While the Mustang Much-E is expected to launch this year, the F-150 and Transit electric vehicles are expected to be launched in 2022, Ford executives say they are content to buy batteries from suppliers rather than make them themselves.
This seems to be the latest fork in the road for carmakers towards an electric future.
Tesla is understood to have invested $5 billion in its Nevada super plant, which is working with Panasonic to mass-produce lithium-ion batteries for Tesla’s entire product line. General Motors also began building a plant in Ohio this year and then producing its proprietary Ultium batteries through a $2.3 billion joint venture with LG Chemical. Volkswagen and Daimler are also investing in battery plants.
But Ford executives insist their plans will provide more flexibility if demand for electric cars declines, or chemical breakthroughs make current battery technology erstable. They also point out that suppliers have increased capacity to cope with the coming wave of electric vehicles in the coming years.
Jim Hackett, Ford’s outgoing CEO, said on the company’s second-quarter earnings conference call: “The supply chain has been upgraded since Elon Musk set up the super plant, so that’s not enough to justify moving money to build our own (battery) plant.” Ownership has no advantage in terms of cost or procurement. “
In fact, this different strategy has a huge financial impact. Tesla’s shares rose sharply last week after Tesla CEO Musk signaled he would announce improvements in battery capacity in September. Wall Street analysts praised GM’s Ultium technology and its potential to support divestitures of its electric vehicle business.
Electric Vehicle Supply Equipment (EVSE)
Manufacturers and operators of electric vehicle charging systems and components must maintain high standards in a highly competitive market. In fact, a reliable charging system coupled with internationally recognized safety and performance certificates is both an important selling point and an important step in proving that fees are in compliance.
“I don’t know if there has to be a better way,” Abuelsamid said. If you produce your own, although you will have a guaranteed supply, if you can not sell you may be trapped by this supply. And if you buy from suppliers, if there’s a technological breakthrough, you give yourself flexibility and don’t invest in something that might be too out of time. No matter which way you go, there’s a bit of adventure. “
Ford’s strategy depends to a large extent on the size of its electric vehicle ambitions.
“They’re committed to electrification, but it’s not all battery EVs,” says Abuelsamid. “
GM, meanwhile, envisions a zero-emissions future and plans to make Cadillac an all-electric car brand over the next decade.
Hau Thai-Tang, Ford’s head of product development and procurement, said on an analyst conference call this month that the company needed to produce 100,000 to 150,000 electric vehicles a year for its battery plants to work.
“We didn’t start on that scale to justify capital spending, ” he says. With the exception of all-product line electric car makers like Tesla, it’s not big enough for any OEM to justify such spending. “
He thinks Ford may change its mind as its electric car portfolio expands. Tight battery supplies will limit initial production of the Mustang Mach-E.
Tesla’s super-factories are paying dividends, according to a January analysis by Trefis. The study, published in Forbes, estimates that the automaker’s battery costs fell by 45 percent from 2016 to 2019, with the average cost per vehicle dropping by $7,000.
But Ford believes its reliance on suppliers can also lower prices.
“This gives us the ability to get the latest technology and innovation from multiple suppliers,” says Thai-Tang. So I am well aware of the technical level of Korean, Japanese and Chinese suppliers, and I can exchange views better than them. Of course, we also deal with multiple suppliers, which gives us the opportunity to reduce costs. “
While Ford insists the supply base is in place, the company said tight battery supplies would limit global production of the soon-to-be-launched Mustang Mach-E to 50,000 vehicles in its first year.
Still, the company is reluctant to lock itself in a certain type of battery, and Thai-Tang called Toyota’s story a cautionary tale. “They (Toyota) invested in vertically integrated nickel hydride batteries for their hybrid vehicles. After spending $1 billion, however, battery technology turned to lithium-ion batteries, and they became one of the last companies to switch. I don’t want Ford in that situation. “