Ford to source cheaper EV batteries from CATL

Ford to import lower-cost EV batteries from CATL for its North American EVs

Ford announced that it is going to import lower-cost lithium-ion batteries from CATL for its North American electric vehicles. This includes SUVs and electric pickups. This deal is based on a broader alliance with CATL and an array of separate deals to acquire battery materials in the next decade.

Ford to source cheaper EV batteries from CATL
Image credits- Automotive News

It is known that Ford Vice President Lisa Drake said the automaker plans to secure lithium-iron, or LFP, batteries from a new 40 GWh factory in North America starting in 2026. Drake would not say if that factory would be built by CATL. Reuters reported in May that CATL was looking at U.S. sites to build EV batteries to serve Ford and BMW.

So, the automaker’s decision to use lithium-iron batteries in its best-selling North American EVs is the latest sign that lithium iron’s lower cost – Ford said the chemistry can cut material costs by 10-15% – is worth the trade-off in range. Tesla is offering LFP batteries in some lower-priced Model 3 sedans sold in the United States. Electric truck and van maker Rivian also has said it intends to use LFP batteries. Drake said Ford wants to secure more batteries and battery materials from North America, but cautioned: “I wouldn’t say that we have 100% confidence that all of these can be localized. It’s hard work.”

Business opportunities

Ford said it also has agreed with CATL to explore using 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 their respective strengths to jointly explore new business opportunities worldwide,” involving lithium-iron and other battery technologies.

The CATL agreements are part of a series of deals Ford disclosed to show that it is speeding up efforts to secure battery capacity and raw materials. Among them was an agreement to explore buying lithium from Australian mining giant Rio Tinto, nickel from Vale SA’s units in Canada and Indonesia, China’s Huayou Cobalt, and BHP.

Some of the metals agreements are linked to projects that likely will not be produced until the later part of the decade. The Rio and Compass Minerals deals involve so-called direct lithium extraction technologies that have never worked at a commercial scale.

Investors are concerned that supplies of battery materials and battery-making capacity will not keep up with demand for electric vehicles, leaving some automakers short in the later years of this decade. 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. U.S. government officials are increasingly concerned about the auto industry’s reliance on China as the dominant source for battery materials and battery cells.

Credits- Reuters