Ford announced on Monday that it is spending $3.5 billion to construct a factory in Michigan that will produce less expensive lithium iron phosphate batteries for its expanding lineup of electric vehicles.
The Marshall, Michigan-based factory won't produce nickel cobalt manganese (NCM), a component of the company's current electric vehicles.
Ford confirmed earlier reports that it collaborates with the Chinese business Contemporary Amperex Technology Co, or CATL.
Under the terms of the agreement, Ford's fully owned subsidiary would use CATL's LFP battery cell expertise and services to build the battery cells.
“We are committed to leading the electric vehicle revolution in America, and that means investing in the technology and jobs that will keep us on the cutting edge of this global transformation in our industry,” said Ford executive chair Bill Ford in a statement.
“I am also proud that we chose our home state of Michigan for this critical battery production hub.”
Ford's pledge to invest more than $50 billion on electric vehicles globally through 2026 includes the $3.5 billion facility.
By the end of this year, Ford said it intends to deliver 600,000 electric vehicles globally, and 2 million by the end of 2026.
The company claims that the factory, known as BlueOval Battery Park Michigan, will initially hire 2,500 workers.
In 2026, production is anticipated to start.
Ford will have the choice to expand its battery manufacturing facility.
According to CEO Jim Farley, Ford will begin using LFP batteries in its portfolio this spring, starting with the Mustang Mach-E.
In the summer of 2018, Ford announced that starting in 2023, CATL would provide LFP battery packs for the Mach-E SUVs in North America, followed by the F-150 Lightning pickup trucks in early 2024.
The choice by Ford to produce LFP batteries here in the United States is a reflection of a general trend among automakers to use this more established, less expensive, and secure technology.
For instance, Tesla currently employs LFP batteries in the EVs it produces and offers for sale in China.
A deal with a group of colleges in the US and Canada that collectively own the technology's patents has allowed China to control the LFP industry for almost ten years.
However, as patents become more accessible and the price of battery components increases, this is about to change.
A higher energy density increases the range of newer battery chemistries like nickel-manganese-cobalt (NMC) and nickel-cobalt-aluminum (NCA).
But LFP are less expensive and more prone to catching fire because they don't employ rare raw elements like cobalt and nickel.
These benefits have grown more alluring to automakers as they work to provide EVs at lower prices while preserving or even increasing profit margins.
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