Ford Motor and SK Innovation to Form Joint Venture to Build Electric-Car Batteries in the U.S. -- 3rd Update
May 20 2021 - 11:36AM
Dow Jones News
By Ben Foldy
Ford Motor Co. has struck a deal with South Korean firm SK
Innovation Co. to form a joint venture to build electric-car
batteries in the U.S., the latest in the auto industry's efforts to
fortify supplies of this critical part ahead of the rollout of more
plug-in models.
The No. 2 U.S. auto maker by sales said Thursday it had entered
into a memorandum of understanding with the battery-making company
to establish the joint venture, which will be called BlueOvalSK.
The partnership aims to build batteries and related components in
the U.S. with the goal of producing approximately 60 gigawatt hours
annually by mid-decade, the two companies said.
Ford executives said the target output would likely lead the
joint venture to build two new battery plants in North America, but
details have yet to be completed and are expected to come later
this year. The venture and ownership structure are also still under
discussion and will be subject to regulatory approvals, the
executives said.
"This is all intended to help Ford build the capabilities and
expertise to develop and manufacture batteries at scale," said Hau
Thai-Tang, Ford's chief product and operations officer.
Ford shares were up 4.2% in trading Thursday morning.
SK Innovation is one of the world's largest battery producers
and Ford already has a supply relationship with the firm to make
batteries for some models, including its coming electric F-150
truck.
Ford, like many other major car companies, is investing billions
to develop more battery-powered models, a shift being spurred on by
tougher tailpipe-emissions regulations globally and more
governments setting target dates for phasing out the sale of
gasoline-engine vehicles.
Ford CEO Jim Farley said last month that the company intends to
get into the battery-making game with plans to develop its own
lithium-ion batteries for electric cars. Other legacy auto makers
are also taking a similar route, following the lead of electric-car
maker Tesla Inc. in making electric-vehicle components in house
rather than relying on outside suppliers.
Rival General Motors Co. is already building an electric-car
battery plant in Ohio through a joint venture with LG Chem Ltd.,
set to open next year. Earlier this year, the Detroit-based car
maker said it would construct a second $2.3 billion battery factory
in Tennessee through the partnership as it gets ready to introduce
more plug-in models.
As car companies look to expand their electric-model lineups,
the race to secure battery supplies is intensifying, as some
analysts raise concerns that the fast-growing demand will quickly
outstrip the existing manufacturing capacity.
The Biden administration has made building up domestic
manufacturing capacity for electric-car batteries a priority and
earlier this year ordered a broader review of the nation's supply
chains with the aim of localizing more production.
In joining forces with SK Innovation, Ford executives said they
hope to expand their know-how of the battery chemistry and the
manufacturing process with the aim of lowering costs for
consumers.
The partnership marks a shift in strategy in Ford, which had
previously sought to lean more heavily on outside suppliers to
source its electric-vehicle batteries, an arrangement that is more
traditional in the auto industry for other parts.
Mr. Thai-Tang said that the company within the past year has
expanded its commitment to electric vehicles and sees value in
vertically integrating this piece of the supply chain.
"We now have sufficient volume to justify this level of
investment," he said. "It gives us the ability to secure supply in
a commodity that we see potentially could become constrained."
On Wednesday night, Ford rolled out its latest entry into the
electric vehicle market -- a battery-powered version of its
bestselling F-150 pickup truck. The company has also said it plans
to spend $22 billion through 2025 to electrify more of its vehicle
lineup.
On Thursday, a leader at the United Auto Workers union pressed
Ford in a statement to ensure that any future battery-making jobs
will go to unionized workers, regardless of the joint-venture
arrangement.
When asked about the potential for creating union jobs, Lisa
Drake, Ford's North American chief operating officer, said that
discussions aren't at that stage yet and the joint venture's labor
strategy will be determined after a final agreement is reached
later this summer.
Write to Ben Foldy at Ben.Foldy@wsj.com
(END) Dow Jones Newswires
May 20, 2021 11:21 ET (15:21 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
Ford Motor (NYSE:F)
Historical Stock Chart
From Mar 2024 to Apr 2024
Ford Motor (NYSE:F)
Historical Stock Chart
From Apr 2023 to Apr 2024