Diving brief:
- Ford has secured several new raw material suppliers for its electric vehicle batteries, as the automaker warns that a limited supply could hamper its electric vehicle ambitions.
- The company has signed agreements with suppliers around the world for lithium, as well as graphite, cobalt and nickel. Ford has also signed new or expanded agreements with mining, processing and manufacturing companies in North America, Asia and South America.
- CEO James Farley noted during a earnings call last Wednesday that prioritizing battery raw materials is crucial, as demand for electric vehicles is expected to eventually outpace supply of raw materials. “At best, 50% of all raw materials needed to meet the combined targets announced for all EV manufacturers are actually available.”
Overview of the dive:
Ford signs new deals as it strives to secure the necessary mix of chemical feedstocks to power its increasing production targets. The company hopes to reach a global annual production rate of 600,000 electric vehicles by the end of next year.
As part of the plan to achieve this goal, Ford is diversifying its suppliers and sourcing a more diverse mix of materials to bolster its battery supply.
The car manufacturer announced an agreement with energy storage company Contemporary Amperex Technology last month to secure supply of lithium iron phosphate batteries. Ford adds lithium battery mix to portfolio; the company previously relied on nickel-cobalt-manganese batteries.
The automaker’s plans are part of a growing push by automakers to forge new raw materials sourcing strategies as global demand for electric vehicles soars and mineral supplies run out. Auto executives have worried about lithium and nickel supplies for months, and now experts have added graphite to their list of concerns.
Electric vehicle maker Stellantis said in its recent earnings call that it has increased its stake in lithium supplier Vulcan, while Ford’s longtime competitor GM has signed three new supplier deals to bolster its electric vehicle needs.
The focus on safety and supplier diversity underscores the growing concern in the industry that EV battery supply is not matching demand.
“That’s why the speed of securing supply is so critical and strategic,” Farley said on the earnings call, “so is diversifying our battery chemistries to increase our flexibility , our supply and profits and to support different customer use cases.”
