Ford Design and Release Engineer Dane Hardware (right) and Ford Battery Validation Engineer Mary Fredrick measure the voltage of a battery with a digital multimeter at Ford’s Battery Benchmarking and Test Laboratory in Allen Park , Michigan.
DETROIT – Ford Motor is planning to set up a joint venture with the South Korean battery manufacturer SK Innovation, which will eventually manufacture battery cells for electric vehicles in the USA
The companies announced Thursday that they had signed a memorandum of understanding for a joint venture called BlueOvalSK. The production of the battery cells and the supporting modules is to begin in the middle of the decade.
The announcement comes amid an expected spike in electric vehicle sales as well as a push by the Biden government to boost domestic production of critical electric vehicle technologies such as battery cells that power the vehicles.
“As the industry changes, we now have to insource,” Ford CEO Jim Farley told reporters on Wednesday evening when the automaker’s new electric F-150 Lightning pickup was unveiled.
Battery cell supply and production is critical for automakers moving to electric vehicles. Farley compared it to automakers who built their own engines and powertrain components in the early 20th century. He said this will help avoid potential future bottlenecks like the one the industry is currently experiencing with semiconductor chips.
Ford expects to produce up to 140 gigawatt hours (GWh) of energy for battery cells annually in North America and up to 240 GWh worldwide by 2030.
In the USA, the companies are initially planning an annual production of up to 60 GWh. That would be enough power for about 600,000 electric Mustang Mach-E crossovers from the automaker, Hau Thai-Tang, Ford’s lead product platform and operations manager, told the media on a call Thursday.
The formation of the joint venture, which Reuters first reported on Wednesday, is subject to final agreements, regulatory approvals and other conditions.
In May, CNBC first reported that Ford is expected to sell enough electric vehicles to start manufacturing its own battery cells by 2025.
Ford had no plans to manufacture its own battery cells until Farley took the helm on October 1st. He changed the course of his predecessor Jim Hackett, who had said the automaker saw “no advantage” in making battery cells.
Ford’s biggest rival in Crosstown, General Motors, is years ahead of its EV battery plans and recently announced its second US Ultium plant, valued at $ 2.3 billion, in which battery cells are part of a joint venture LG Chem are to be manufactured. The two companies are already building an Ultium Cell facility in Lordstown, Ohio, due for completion in 2022.
Both GM plants in the US are expected to come on stream before Ford goes into production.