Ford isn't waiting — it's all in on EVs

MEMPHIS, Tenn. — When Ford Motor Co. introduced the F-150 Lightning in May, CEO Jim Farley said it would be a measuring stick to gauge customer acceptance for electric vehicles.

But Ford had no intention to wait for the results. At that same time, behind the scenes, the automaker was forging ahead on plans for its next-generation electric pickup and a trio of battery plants to power 1 million Ford and Lincoln EVs a year. Those plans crystallized last week in the form of an $11.4 billion investment that will create 11,000 jobs building EVs and batteries in Tennessee and Kentucky.

It's the clearest sign yet that Farley wants Ford to be a major player — if not the leader — in EVs. Since ascending to the chief executive office last year, he has nearly tripled Ford's spending on electrification and inked major partnerships for battery production and recycling.

"We have to be bold, we have to go big and we have to do it now," Executive Chair Bill Ford said at an event here announcing plans for a 3,600- acre complex called Blue Oval City, set to open in 2025. "It's no longer hypothetical; it's real. The magnitude of what we're announcing is not only huge but leads the industry."

The automaker expects its battery plant in western Tennessee and two others in central Kentucky will produce up to 129 gigawatt-hours annually, which it says is double the country's total battery production today.

And there's more coming.

Bill Ford told reporters last week that the company "almost for sure" will need additional sites to help it reach a goal of making 40 to 50 percent of its global fleet fully electric by 2030. Farley also strongly hinted at upcoming announcements.

"Even if these plants [do] not generate any positive free cash flow before the end of the decade, it's important that Ford sends the message to stakeholders and customers that it is taking zero-emission vehicles extremely seriously," Adam Jonas, an analyst with Morgan Stanley, said in a note to clients. "It seems Ford CEO Jim Farley is moving with aggression and urgency to make up for lost time on the industrialization of EV mass production."

Ford executives say Blue Oval City will be the type of vertically integrated, closed-loop production facility they believe is necessary for sustainable manufacturing.

The site, which encompasses 6 square miles, will house an assembly plant to build the next-generation electric F-Series on a dedicated EV architecture, unlike the Lightning's modified internal-combustion platform. Executives say the plant, Ford's first new assembly plant on undeveloped land since Kentucky Truck opened in 1969, will be carbon-neutral and have the potential to use geothermal, solar and wind power.

Tennessee Gov. Bill Lee said the state will build a trade school on the campus to train the 6,000 workers who will be employed there.

Ford will build the batteries to power the truck on the same site. Blue Oval City also will have space for Redwood Materials, a battery recycling company Ford partnered with last month, to turn production waste and old batteries into new materials.

"This is intended to be an incredibly efficient ecosystem," Ford North America COO Lisa Drake told Automotive News. "It doesn't matter much if you build an EV if you're not as conscious about how you're building it. The whole site layout and environment is just as important as the product we're building."

In Kentucky, Ford plans to build twin battery plants as part of a joint venture with Korean battery maker SK Innovation. Both plants will supply batteries for multiple vehicles and are near multiple Ford assembly plants.

Farley told CNBC last week that it was important for the company to in-source battery production to avoid issues such as the global semiconductor shortage.

"We have to learn how to manufacture them in this country," he said. "We can no longer import raw materials from halfway around the world."

All told, Ford is committing $7 billion toward the Kentucky and Tennessee projects, with $4.4 billion coming from SK.

Ford has invested in electrified vehicles in the past, but models such as the Focus Electric and C-Max hybrid were not successful and are out of production. Executives believe that this time, their bigger bets will pay off.

"We're going to have an incredible new lineup of vehicles, something that people can't imagine today," Farley told reporters in Memphis.

Farley is pleased with the Mustang Mach-E on sale now, as well as the F-150 Lightning coming next year. He said the 150,000 reservations for the electric pickup "is far beyond what we expected" and gives the company confidence it's on the right path.

The early demand has persuaded the automaker to adjust its EV goals; in May, it planned for 40 percent of its global fleet to be EV by 2030, but now Ford says as much as half will. Farley said the transition "will probably go faster" than Ford expects.

Bill Ford said the company is in a much different position than 10 years ago, when regulatory mandates drove much of its EV decision-making.

"Technology has progressed to the point where mass adoption is going to be very likely," he said. "It's really a confluence of technology and also customer awareness. There's great pull from Mach-E and Lightning from customers. Are there lots of questions we're going to have to answer along the way? Of course, but it's a huge stake in the ground for what we believe will be the future, and we want to make sure we're at the forefront of that future."