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Ford partners with Chinese battery giant CATL to buy cheaper cells for its electric vehicles
By Arghyadeep Dutta - Jul 21, 2022, 04:03 PM ET
Last Updated - Apr 16, 2024, 10:21 AM EDT
Ford Motor Co (NYSE: F) on Thursday said it will import lower-cost lithium-iron batteries for its electric pickup trucks and SUVs in North America from CATL as the carmaker works on a broader alliance with the Chinese battery giant
Ford Motor Co (NYSE: F) on Thursday said it will import lower-cost lithium-iron batteries for its electric pickup trucks and SUVs in North America from CATL as the carmaker works on a broader alliance with the Chinese battery giant.
Lisa Drake, Ford’s vice president, said the automaker plans to secure lithium-iron, or LFP, batteries from a new 40 GWh factory in North America starting in 2026; however, the company did not mention if that factory would be built by CATL.
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The carmaker said LFP battery chemistry could cut material costs by 10% to 15%, which is worth the trade-off in range.
Tesla Inc (NASDAQ: TSLA) offers LFP batteries in some lower-priced Model 3 sedans sold in the United States.
Drake said Ford wants to secure more batteries and raw materials from North America but warned, “I wouldn’t say that we have 100% confidence that all of these can be localized... It’s hard work.”
The carmaker, in its statement, said it has also signed another memorandum of understanding (MoU) with CATL to explore using the Chinese battery maker’s cells in Ford vehicles sold in the United States, Europe and China.
CATL, in a statement, said, “the two companies plan to leverage their respective strengths to jointly explore new business opportunities worldwide,” involving lithium-iron and other battery technologies.
The news came as ford is planning for more than half its global production to be EVs by 2030 and achieving carbon neutrality by 2050.
Ford said it has now sourced about 70% of the battery capacity it needs to support its goal of building more than 2 million EVs worldwide by late 2026.
Lithium-iron batteries typically deliver less driving range than comparable batteries that use nickel and cobalt, and other automakers have stuck with more expensive nickel-cobalt battery chemistries for the US market, where more extended driving range is a crucial competitive measure.
“We know battery material costs is where the war will be won,” Drake said during a call Thursday.
“LFP will give the biggest step function down” in costs.
Lower-cost batteries could allow Ford to drop its F-150 Lightning and Mach-E prices or boost profit margins.
On Wednesday, Bloomberg reported that the carmaker is planning to cut as many as 8,000 jobs in the coming weeks as Ford tries to boost profits and turn its focus on the electric-vehicle market.
Ford and South Korean battery maker SK On Co set up a joint venture for building and operating battery production facilities in the US for electric vehicles, the carmaker said last week.
Picture Credit: Reuters
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