Ford Partners With CATL Battery Factory, “China's Victory” In Electric Car Industry

JAKARTA - Ford Motor Co on Thursday, July 20 said it would import lower-cost lithium iron batteries for electric pickup trucks and North American SUVs from Chinese battery manufacturer CATL. They are now working on a broader alliance with CATL and a range of separate deals to secure batteries and battery materials into the next decade.

Vice President Ford. Lisa Drake, said they plan to secure lithium-iron batteries, or LFPs, from a new 40 GWh plant in North America starting in 2026. Drake would not say whether the plant would be built by CATL. Reuters reported in May that CATL was looking into areas in the US to build EV batteries to service Ford and BMW.

Ford's decision to use lithium-iron batteries in North America's top-selling EV sales is the latest sign that lithium-iron's lower cost is worth it. Ford says chemicals can cut material costs by 10-15%.

Tesla is offering LFP batteries in some of the lower priced Model 3 sedans sold in the United States. Electric truck and van maker Rivian also said it would use LFP batteries.

Drake said Ford wanted to secure more batteries and battery material from North America. "I wouldn't say that we have 100% confidence that all of this can be localized ... It's hard work," Drake said, as quoted by Reuters.

Ford said it had also agreed with CATL to explore the use of the Chinese company's batteries in Ford vehicles sold in the United States, Europe and China.

CATL said in a statement "the two companies plan to leverage each other's strengths to jointly explore new business opportunities around the world," involving lithium-iron and other battery technologies.

The CATL agreement is part of a series of deals that Ford unveiled to show it is accelerating efforts to secure battery capacity and raw materials. Among these are deals to explore purchasing lithium from Australian mining giant Rio Tinto, and nickel from Vale SA's Canadian and Indonesian units, China's Huayou Cobalt and BHP.

Several metal deals are tied to projects that are unlikely to go into production until the end of the decade. The Rio and Compass Minerals deal involved a so-called direct lithium extraction technology that never worked on a commercial scale.

Investors worry that the supply of battery material and battery manufacturing capacity will not meet the demand for electric vehicles, leaving some automakers short on materials in the last years of the decade.

Ford said it has now supplied about 70% of the battery capacity needed to support its goal of building more than 2 million EVs worldwide by the end of 2026.

US government officials are increasingly concerned about their auto industry's dependence on China as the dominant source of battery and battery cell materials.

Ford's decision to use lithium iron phosphate CATL batteries for the Mustang Mach-E starting next year, and the F-150 Lightning in 2024, marks a significant win for the Chinese battery maker, and a shift in Ford's US marketing strategy.