June 17, 2021

Gp Delivers

The excellent automotive artisans

Ford Plans to Manufacture Its Own Batteries for Electric Vehicles

Ford Motor Co.

F 1.79%

is getting into the battery-making game with plans to develop its own lithium-ion batteries for electric cars, the latest auto maker to bring the critical technology in-house as the industry rushes to sell more plug-in cars.

Ford said Tuesday it plans to open a $185 million battery-development center in southeast Michigan next year. The Dearborn, Mich.-based auto maker eventually plans to manufacture its own battery cells, product chief

Hau Thai-Tang

said during a media call Tuesday.

Major auto makers are diverting much of their capital spending into electric vehicles, prodded by tougher emissions regulations globally and the emergence of electric-vehicle leader

Tesla Inc.

TSLA -4.53%

and a slate of startups.

Some legacy car companies are following Tesla’s lead by making electric-vehicle components in-house rather than relying on outside suppliers. Batteries are by far the most expensive component of plug-in cars, accounting for a quarter or more of the vehicle’s total cost, and factories to make battery cells require huge outlays of capital.

Demand for lithium is expected to outpace global supply as consumers switch to battery-powered vehicles. With China currently leading in processing of the vital raw material, the U.S. government is looking to boost domestic production. Photo illustration: Carlos Waters/WSJ

Analysts have said Ford is behind rivals in making the pivot to electric vehicles when investors are betting big on companies that make them. Since he took over the company last fall, Ford Chief Executive

Jim Farley

has signaled a more aggressive approach to plug-in cars, including a move into batteries.

“I think electrification is a game changer in terms of the mix of products we sell,” Mr. Farley said last week during a virtual forum hosted by trade publication Automotive News. He said Ford is “going to need lots of battery plants,” although the company until now hasn’t detailed plans to make its own battery cells.

Ford’s move follows

General Motors Co.

GM 1.31%

and

Volkswagen AG

VOW 0.14%

, both of which already are investing in factories through partnerships with battery makers.

GM confirmed this month that it would build a $2.3 billion battery plant in Tennessee with joint-venture partner

LG Chem Ltd.

051910 -0.67%

GM also is building a similar battery factory with LG in Ohio, set to open next year. VW recently said it would invest in six battery factories in Europe alone, including an expansion of its existing partnership with Northvolt AB of Sweden.

Batteries for Ford’s earliest plug-in models will come from outside suppliers. Battery cells for an electric version of Ford’s popular F-150 pickup truck due out next year, for example, will come from

SK Innovation Co.

096770 -2.50%

of South Korea.

Ford engineers working at the company’s Battery Benchmarking and Test Laboratory in Allen Park, Mich.



Photo:

Ford Motor/Associated Press

Some analysts have warned of a potential shortage of batteries in coming years as established and upstart auto companies draw up plans for hundreds of new models. President Biden has given priority to the development of an electric-vehicle supply chain in the U.S. to reduce the industry’s reliance on China and other Asian countries for batteries and other components.

The move is a strategic shift for Ford. Last year, Mr. Thai-Tang said it made more sense for Ford to lean on its supply base to deliver batteries for the company’s relatively low electric-vehicle volumes.

Now, he said Ford wants to make sure it has control over future battery supplies as it earmarks billions of dollars to develop more plug-in models in coming years.

Supply-chain disruptions related to the pandemic, including a severe global computer-chip shortage that has hobbled Ford’s production in recent months, reinforced that view, he said.

“This will help us better control our supply and deliver high-volume battery cells with greater [driving] range, lower cost and higher quality,” he said.

Write to Mike Colias at [email protected]

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