Ford stock rose Thursday as the automaker announced a slew of battery moves to reach its ambitious targets for producing electric vehicles, including a new deal with China's CATL.
In a release Thursday, Ford confirmed securing 100% of the battery cell capacity needed to support its annual target of 600,000 electric vehicles globally by late 2023.
In addition, it has sourced 70% of the capacity for more than 2 million EVs a year globally by 2026.
As part of the capacity expansion, Ford will add battery chemistries and plans to directly source critical battery materials from miners across the globe. In North America, it will start using cheaper, longer-lasting but typically lower-range LFP batteries alongside existing battery types, for the new Mustang Mach-E and F-150 Lightning EVs.
"Ford's new electric vehicle lineup has generated huge enthusiasm and demand, and now we
are putting the industrial system in place to scale quickly," CEO Jim Farley said in Thursday's release. But a Wall Street analyst said Ford's announcements were light on specifics, including capital requirements, and many of the agreements mentioned were of a nonbinding nature.
In an increasingly competitive landscape, global EV leader Tesla and Ford archrival General Motors have previously moved to lock up supplies of battery materials.
Ford seeks "to lead the EV revolution," aiming at Tesla while shifting away from fossil-fuel cars.
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Ford Stock Rallies For Fifth Day
Shares of Ford rose 2.1% to 12.99 amid mixed action on the stock market today, adding a fifth day to its rally. The advance has kept Ford stock above its 50-day moving average, after regaining that line of support on Tuesday for the first time since January. General Motors added 0.9% to 35.07 Thursday, regaining the 50-day line. Tesla soared 9.8% after reporting a Q2 earnings beat late Wednesday.
While easing Thursday, both GM stock and Ford are working on their third straight weekly advances. That suggests investor optimism with Ford and GM earnings due next week.
Both the auto giants remain well under their 200-day averages and their relative strength lines are lagging. A falling RS line means a stock is underperforming vs. the S&P 500.
Ford EV Battery Update
Here are other highlights from Thursday's update on Ford's EV battery strategy:
- In North America, Ford will add EV batteries based on lithium iron phosphate (LFP) cell chemistry. It currently uses nickel cobalt manganese (NCM) chemistry. LFP batteries could mean more production capacity for high-demand electric vehicles. It reduces the need for nickel, which is scarce, and cut costs 10%-15% vs. NCM batteries.
- Ford has a new deal with China's CATL, the world's largest battery maker. In North America, CATL will provide LFP packs for Ford's Mustang Mach-E SUV starting next year, and for the F-150 Lighting in early 2024.
- From 2026, Ford hopes to produce LFP packs locally in North America. This additional capacity will add to three previously announced battery plants in Kentucky and Tennessee.
- In addition, Ford and CATL have signed a nonbinding memorandum of understanding, or MOU, "to explore" cooperation across China, Europe and North America.
- Current battery partners LG Energy Solution (LGES) and SK On have installed or increased capacity to help Ford meet its NCM battery target for 2023.
- Further down the battery value chain, Ford seeks to lock up nickel and lithium contracts, signing nonbinding MOUs with Vale, BHP and Rio Tinto, among others. Nickel and lithium, needed to make EV battery cells, have seen prices soar on supply-demand and other issues.
Through 2026, Ford now sees EVs growing at a compounded 90% rate, more than double the predicted global growth. It cited a recent EY study showing that more than half (52%) of prospective car buyers want an all-electric or hybrid-electric vehicle, up 11% from 2021 and up 22% from 2020.
