Ford has announced several partnerships with mining companies to directly source raw materials, and added new battery chemistries and capacity to accelerate its electrification plans and manage supply shortages across the electric vehicle (EV) industry.
The Dearborn, Michigan-based automaker has signed memorandums of understanding (MOUs) with several miners to source both lithium and nickel for its EV batteries. Ford has announced another deal with Chinese battery maker CATL for lithium iron phosphate (LFP) battery cell packs, helping to diversify the types of batteries used in its EV portfolio.
These agreements will give Ford enough capacity and materials to reach its target of having an annual run rate of 600,000 EVs by late 2023 and more than two million by the end of 2026.
“We are putting the industrial system in place to scale quickly,” Jim Farley, Ford’s president and CEO, said in a statement on July 21.
By 2030, the automaker aims to have EVs make up more than half of its global production. In March 2022, Ford increased its planned spending on EVs by end-2026 from $30bn to $50bn.
Among the non-binding MOUs signed is a multi-year nickel supply agreement with Australian mining giant BHP, which could start as early as 2025 and extend to other commodities in the future.
“Demand for nickel in batteries is estimated to grow four-fold over the next decade,” said BHP’s chief commercial officer Vandita Pant in a statement, adding that sustainable and reliable production of quality nickel “will be essential” to meeting demand from automakers.
Ford has also created a three-way partnership with nickel miner Vale Indonesia and China’s Zhejiang Huayou Cobalt to establish a plant in Indonesia to process nickel ore.
“We will move fast in the key markets and regions where critical supplies are available,” said Lisa Drake, Ford’s vice president for EV industrialisation in a statement. The company has secured important lithium contracts too, including a non-binding MOU with Anglo-Australian mining behemoth Rio Tinto.
The addition of LFP batteries to Ford’s EV portfolio, alongside existing nickel cobalt manganese (NCM) chemistries, will reduce its reliance on scarce critical minerals such as nickel, according to the company. Ford estimates LFP batteries bring a saving of 10% to 15% on materials, relative to NCM batteries at current costs.
The non-binding MOU with CATL will explore cooperation for supplying LFP batteries in Ford’s markets across China, Europe and North America. Ford said it will localise and use 40GWh of LFP capacity in North America in 2026.
The company said this new capacity will complement three previously announced battery plants in Kentucky and Tennessee as part of its BlueOval joint venture (JV) with SK On, the South Korean battery manufacturer. Ford said it has also signed an additional MOU with Koç Holdings to create a JV in Turkey for expanded battery capacity there.
But Ford’s major EV push is coming at a cost to its legacy business. Bloomberg reported on July 20 that the automaker is planning to lay off as many as 8000 workers from its Ford Blue segment, which is responsible for its internal combustion engine business.