Ford and SK Innovation, a South Korean battery manufacturer, will jointly spend $11.4 billion to construct new factories in Tennessee and Kentucky that are geared towards the production and development of electric vehicles and batteries.
These new facilities are the first Ford plants to be built completely from scratch in more than 50 years. The Tennessee plant will house a massive production facility and a battery assembly division. Kentucky's twin factories will produce lithium-ion batteries.
This is show time, not tell-time.
Although the facilities will not be available until 2025 by Ford CEO Jim Farley, the investment shows the seriousness of Ford's commitment to electric vehicles. Farley stated that the new campus in Stanton in Tennessee will be nine miles in size and is the largest ever built by Ford in its 118-year history.
Farley said that this is a brand new Ford. This is show time, not tell-time.
Ford is trying to shift its focus to EVs like the rest the auto industry. Even though they make up a small percentage of all vehicles sold each year, This announcement comes as Congress debates whether to approve infrastructure deals that would allow for the construction of hundreds upon thousands of charging stations and new incentives for EV sales. The announcement comes at a time when the auto industry is grappling with new proposals to ban the sale of gasoline cars in certain US states and foreign markets.
Farley used the analogy of electric cars being in the same place as smartphones in 2007 to explain this. Farley stated that this story is not about propulsion. This is a story about digital vehicles with embedded system, and a customer experience that changes the definition of a vehicle from something that takes you from A to B to an option that allows you to live your full life.
Ford's approach to EV production has changed with the new facilities. This is a riskier move financially, but it could pay off in the long-term if Ford can supplement its production with suppliers.
Ford currently sources its batteries through SK Innovation. SK Innovation recently lost a trade dispute with rival LG Chem, which could hamper its imports to America. The companies reached an agreement which could prevent a ban on imports. Ford can make its own batteries in the USA, which will avoid many of the problems that could arise from buying batteries from overseas.
Farley estimates that Ford will require 140GWh per year in battery manufacturing capacity. The company's three new batteries plants will allow for 129 gigawatt hours (GWh) of production capacity. General Motors, along with its partner LG Chem, is building four new US battery factories. This will give them a combined annual capacity of 140GWh. Volkswagen, on the other hand, is looking to establish six European battery production plants by 2030, for a total of 242GWh per year. Tesla CEO Elon Musk stated that his first battery factory in Berlin would produce 250GWh, which is roughly equivalent to the world's current battery cell production capacity.
Globally, the battery production is expected increase from 95.3GWh 2020 to 410.5GWh 2024 according to GlobalData.
Farley stated that Ford's contribution to massive investments in battery capacity will make a significant impact due to its position as the maker of the F-150 pickup truck. This pickup truck has been the most loved vehicle in America for decades. He said that this announcement is not like Tesla or the others because it is huge in scale. America's most popular electric vehicles are now going electric. They were completely sold out.
Ford claims it will spend $7Billion, and SK Innovation will contribute $4.4B, making a total of $11.4B. Ford previously stated that it would spend $30billion by 2025 and that 40% of its fleet will be electric by 2030. Ford is currently retrofitting its Rouge factory to make the all-electric Ford F-150 Lightning pickup trucks.
Blue Oval City will be the name of Stanton's mega campus. Ford claims that the facility will create approximately 6,000 jobs at a cost of $5.6billion. Blue Oval City will be a vertically integrated hub for Ford's production of a new range of electric F-series cars. It will include key suppliers and recycling, a battery plant, and key suppliers. Redwood Materials, a battery recycling company founded by former Tesla executives, was recently acquired by Ford. Ford stated that Blue Oval City will also be carbon neutral and have zero waste to landfill when it is fully operational.
Ford and SK Innovation will jointly build a battery manufacturing facility in central Kentucky. The complex, which will be called the BlueOvalSK Battery Park and cost $5.8 million, will create 5,000 jobs. The twin battery plants will produce the next generation of Ford and Lincoln electric vehicles. BlueOvalSK, a joint venture that Ford is still awaiting regulatory approvals, will provide the construction money.
Ford estimates that 11,000 jobs will be created in each of the two states. Ford says that it will spend $525 million to train workers across the country. The company started with $90 million in Texas for a pilot program. It is hoped to train the next generation workers in the intricacies EV manufacturing and maintenance. This will allow them to not only work at Fords factories, but also at its dealers and make repairs out in the field.
Farley stated that there is a huge shortage of technicians in our industry. We must recruit many technicians who can do service on the roads.
Ford receives financial incentives from both Kentucky and Tennessee in return for his agreement to build there. Kentucky and Tennessee are both providing funding in the form training grants to help future workers acquire the skills they need. Farley stated that the main consideration was to find locations with low energy costs, as a battery plant consumes five times the energy as a traditional assembly line. Ford prioritized greenfield sites that have no environmental problems so it could build quickly. Farley stated that we need to move quickly.
Ford's transition to electric cars has not been without its speed bumps
The Ford's transition to electric cars has been fraught with bumps. After determining that the adhesive used for attaching the optional glass roof and windshield to the Mustang Mach-E was not secure enough, Ford issued two recalls this week. After an earlier investigation that revealed loose subframe bolts, this was the Mach-E's second recall. The company also delayed customer deliveries of the Mach-E after discovering a software issue that caused the 12-volt battery to die, as The Verge reported in April.
Farley was asked about recalls and acknowledged that Ford still has a lot to do around quality. He said that this is the first inning. But demand is high. People love this car. It just needs to be better each day. That's up to us.
