Ford rethinks making own batteries

DETROIT — Ford Motor Co.'s plans for electric vehicle battery production appear to be accelerating like a Mustang Mach-E in "Unbridled" mode.

Less than a year ago, Ford's top executives were extolling the benefits of relying on its supply base for the battery cells to power its upcoming EVs.

Former CEO Jim Hackett told investors there was "no advantage" to Ford investing heavily in its own plants, as Tesla and General Motors have done.

But Hackett's successor, Jim Farley, says the automaker will need numerous battery plants, and its next step will be to allocate money for them.

The about-face follows Ford's move to roughly double its investment in electrification, the start of a new White House administration that prioritizes EVs and investments by key competitors in their own battery plants. The ongoing semiconductor shortage also has prompted executives, Farley included, to rethink how they source critical components.

"A lot of things have changed in the last year," Sam Fiorani, vice president at AutoForecast Solutions, told Automotive News.

For starters, Ford is finally selling a full EV in the Mach-E, and it committed $22 billion toward electrification through 2025. The automaker plans to sell only EVs in Europe by 2030, and its F-150 EV is coming to the U.S. next year.

Farley has likened the EV revolution to the early stages of a baseball game.

"In the first inning, you could buy batteries and you could cherry-pick the technology, energy density and cost from multiple sources," Farley said in an interview last week.

"We're in the second inning now. The volumes are going to grow. We've committed $22 billion to converting the factories and engineering the new products. The next thing is going to be allocating the cost of batteries. Our $22 billion does not include any resources for batteries. So you can imagine and you can expect from Ford lots of announcements."

GM this month revealed plans for a second U.S. battery cell manufacturing plant, this time in Spring Hill, Tenn., with South Korean joint-venture partner LG Chem Ltd. The automaker also is building a battery plant in northeastern Ohio; each site represents a $2.3 billion investment.

Farley would not say whether Ford has specific plans for one or more U.S. battery plants.

"We'll see," he said. "We're going to need lots of battery plants."

The need to insource battery work has taken on new priority amid an ongoing microchip shortage that has upended the industry.

"It's scaring everybody into making sure they have the proper supplies of all the parts they need," Fiorani said.

Farley last week said he has been benchmarking nonautomotive companies that use chips and found that many have a safety stock or source them multiple ways.

"This has been a really key lesson and it comes on the eve of this change where the whole industry is moving to batteries as a key commodity," Farley said. "I think chips are a great metaphor for the growing technology in our vehicles, including batteries."

Fiorani said automakers that spent the past few decades outsourcing work to their supply base also may be attempting to differentiate their vehicles with key parts. Tesla held a "battery day" presentation last year that detailed proprietary advances it says will lower costs and improve performance.

"Batteries and motors are the new engines and transmissions," Fiorani said. "It becomes part of the product."