Ford secures battery deals to ramp up EV production

Ford has inked a deal with Chinese battery producer CATL and locked in contracts for raw materials with Australia’s BHP and other suppliers to ensure it can ramp up the number of battery-electric models it builds to more than 600,000 per year from late 2023 – and two million a year by 2026.

The partnership will see CATL supply lithium-iron phosphate (LFP) batteries from next year, enabling the US auto giant to meet its production commitments across key new models – the 2023 Ford Mustang Mach-E (270,000), 2023 Ford F-150 Lightning (150,000), the 2024 Ford e-Transit (150,000) and a still-to-be-announced electric SUV (30,000).

The main advantage of LFP batteries compared to the nickel cobalt manganese batteries currently used is that they rely less on scarce minerals like nickel that helps to reduce costs by around 10 to 15 per cent.

The disadvantage of the cheaper batteries is they’re less energy dense that will impact range.

Tesla currently offers LFP batteries in entry-level versions of the Tesla Model 3 and Model Y.

As well as the CATL deal, Ford also confirmed further deals for battery components and raw materials from sources in Australia, the US, Indonesia and other countries.

The Australian connections include nickel supply from BHP via its Nickel West operations, which Ford describes as a “targeted multi-year agreement [that] could start as early as 2025 and may involve additional commodities over time”.

The company has also locked in several lithium contracts including “key asset in Western Australia secured through Liontown Resources” and a non-binding MOU with Rio Tinto, exploring a significant lithium off-take agreement from the Anglo-Australian multinational’s Rincon project in Argentina.

The Blue Oval says it remains on track to produce around two million pure-electric vehicles per annum by 2026, with recent announcements guaranteeing around 70 per cent of the battery capacity it needs to reach this target.

Following the agreement, some Mustang Mach-E models will switch to LFP batteries next year, with the F-150 Lightning scheduled to offer them in 2024.

It’s believed the lower costs will allow sizeable price drops for both models while delivering improved profit margins for the car-maker.

Ford says its EV business is currently not profitable, but by 2026 it expects its electric cars and trucks will have an eight per cent profit margin.

That figure is well behind Tesla’s impressive 14.6 per cent margin.

Back in March, Ford announced that it would ramp up investment from now until 2026 from its original $US30 billion ($A44b) to $US50 billion ($A73b), a move that saw it separate the car-maker into Ford Model e for zero-emissions cars and trucks and Ford Blue for traditional combustion vehicles.

For everything you auto know about EVs, listen to carsales' Watts Under the Bonnet: the electric car podcast

Join the conversation at 

our Facebook page

Or email us at 

editor@carsales.com.au