Ford adjusts electric vehicle strategy as supply shortage threatens sales targets | Rare Techy

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Ford Motor Co. announced it will use lower-performance batteries in certain models to meet electric vehicle targets, the latest example of how global ambitions to reduce greenhouse gas emissions are clashing with the reality of supply chain constraints.

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The Detroit-based automaker currently offers two models, the Mustang Mach-E and the F-150 Lightning, a standard version and an extended-range vehicle. The latter are powered by lithium-ion batteries using the nickel, cobalt and manganese (NCM) chemistry that has become the industry standard, while standard versions use lower-performance NCM batteries.

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Starting in 2023 and 2024, standard versions will be made with cheaper batteries, a second-best alternative that Ford executives felt was the best way to keep up with growing demand for electric vehicles.

Ford announced on July 21 that it has signed a contract to import lithium iron phosphate batteries from Chinese battery maker Contemporary Amperex Technology Co. Ltd. These batteries are less energy dense, which means they have a shorter range, but are easier to use. accessible because they do not contain nickel or cobalt.

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“Right now there are constraints in the supply chain … especially for certain minerals,” Ford spokesman Marty Gunsberg said. “The introduction of a different chemistry will help us break these limitations and it will help us bring more vehicles to market sooner.”

Ford also said it now has contracts with various mining companies, including one to source nickel from Vale SA’s Canadian unit, which operates in Ontario, Newfoundland and Labrador and Manitoba. The company said it has secured 70 percent of the raw materials needed for batteries to support annual production of more than two million electric vehicles by 2026, citing contracts with BHP Group Ltd., Rio Tinto Ltd. and with others.

Bringing in a different chemistry could be the difference between having access to an EV or not.

Marty Gunsberg

Gunsberg said the decision to offer lithium iron phosphate batteries in some vehicles will allow Ford to meet its more immediate goal of producing 600,000 electric vehicles by the end of 2023. Gunsberg declined to provide details on Ford’s expected production or expected consumer demand for either battery chemistry. .

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Lithium-iron-phosphate batteries may cost 10 to 15 percent less than the alternative, but that likely won’t translate into a significant discount off the retail price, Gunsberg said.

Ford announced plans to localize 40 gigawatt-hours of lithium iron phosphate capacity per year in North America.

“Bringing in a different chemistry can be the difference between having access to an EV or not,” Gunsberg said, adding that a cheaper battery may have less range but is “very durable” and “very tolerant of multiple charges.” cycles.”

So far, most Western automakers have resisted the lithium-iron-phosphate battery chemistry, in part because it offers a shorter range. But the batteries are common in China, where Tesla Inc. have sourced them from modern Amperex technology, as Ford does now.

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The situation underscores analysts’ predictions that many metals needed for the energy transition will face supply shortages in the coming years, leading to price inflation and even restrictions on new technology.

Research and data firm S&P Global Inc. Vice President Daniel Yergin released a report last week that pointed to a looming supply shortage in copper risks shorting the energy transition.

Mining executives have long said that critical supply gaps for nickel, cobalt and lithium could develop.

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North Carolina-based Piedmont Lithium Inc. CEO Keith Phillips said he predicts the biggest shortage will be in lithium, which is needed for all battery chemistries.

Piedmont owns 25 percent of Sayona Mining Ltd. of subsidiary Sayona Quebec, which in June said it would invest $80 million to restart a lithium mine in Quebec and hopes to eventually open a refinery.

“The fastest to build is the car plant, the next is the battery plant, but the longest is the mine,” Phillips said. “Each car company is spending billions of dollars” to build their electric vehicle and battery supply chain, and “I believe five years from now there will be articles [because] they can’t run the battery plants at full capacity,” Phillips said.

Correction: An earlier version of this story said Ford Motor plans to offer standard and extended-range versions of the Mustang Mach-E and F-150 Lightning. Ford already offers both versions of each vehicle; the change is the type of battery used in the standard models. We apologize for the error.

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