Battery supplier Ford to spend $ 11.4 billion to build new factories in the United States

DETROIT – Ford Motor and battery supplier SK Innovation plan to invest more than $ 11.4 billion in new US facilities that will create nearly 11,000 jobs to produce electric vehicles and batteries.

Ford is building two lithium-ion battery factories in central Kentucky as part of a joint venture with South Korean company SK called BlueOvalSK, as well as a huge 3,600-acre campus in western Tennessee, the automaker announced Monday evening. The campus will include another SK-built battery plant as well as a supplier fleet, a recycling center and a new F-Series electric truck assembly plant, Ford CEO Jim Farley told CNBC.

The plans are Ford’s latest to ramp up the development and production of electric vehicles – including batteries – under Farley, who started running the automaker a year ago this week. They also reinforce President Joe Biden’s call for companies to build onshore supply chains amid a global semiconductor chip shortage that has disrupted several industries, including the automotive industry.

The investment is part of Farley’s “Ford +” turnaround plan to leverage the automaker’s traditional operations and better position it for emerging sectors such as autonomous, electric and connected vehicles.

“This is the new Ford,” Farley told CNBC in a telephone interview. “It’s about time. We’re putting shovels in the ground, 11,000 new workers.… It’s a huge commitment to build these digital products.”

Ford doesn’t expect to incur additional debt to fund the plans, according to Farley. He said the moves would be funded from company profits.

The new investment is in addition to the $ 30 billion the company had previously announced for electric vehicles through 2025, of which around $ 7 billion had already been invested before February.

Production at the factories, with the exception of one of the Kentucky battery factories, is expected to begin in 2025, the company said. Kentucky’s second battery plant is expected to come on stream in 2026, according to Ford.

The “new Ford” is a radical backbone of Farley’s predecessor Jim Hackett, who previously said the automaker saw “no benefit” from producing its own battery cells. It comes as Ford rival General Motors is spending $ 4.6 billion in a joint venture with LG Chem for battery production, starting in 2023.

Farley said the investment should be further proof that Ford, which many on Wall Street believed to be behind on electric vehicles, is positioned to be a leader in the segment. “I don’t know of any other company making this announcement. Why would you think we’re late? We’re early,” said Farley.

Ford shares have more than doubled since Farley became CEO of the automaker nearly a year ago.

About $ 5.6 billion of Ford’s investment with SK will go to a new campus called Blue Oval City in Stanton, Tennessee and $ 5.8 billion for the two factories in Glendale, Kentucky. Ford will cover about $ 7 billion of the $ 11.4 billion, according to Lisa Drake, Ford’s chief operating officer for North America.

“This is a really pivotal time for us and our country today,” Drake told reporters on a call. “We are announcing the largest single investment in new manufacturing facilities in Ford’s 118-year history.”

BlueOvalSK’s three new factories will allow Ford to produce 129 gigawatt hours per year, enough to power 1 million electric vehicles per year, Ford said icials. That’s more than half of the electric vehicle production capacity Ford is expected to have in the world by 2030.

“This is truly an amazing project, and one that speaks to Ford’s ambition for the fast-growing US electric vehicle industry,” Yoosuk Kim, global marketing director for SK Innovation, said on a call.

Ford expects the new vehicle manufacturing plant in Tennessee to be carbon neutral when fully operational, including zero waste landfill processes.

Farley said the plant will build new F-series electric pickups. He added that the next generation pickup trucks will only be designed to be electric vehicles, unlike the upcoming F-150 Lightning which is based on the pickup truck. traditional with an internal combustion engine.

“We will be building a fully electric, bottom-to-top optimized product platform at this plant. It will be the largest plant in our company’s history,” said Farley. “We’re going to be building a lot of fantastic F-Series EVs there. We’re not going to be specific about the type.”

Farley said the company is “reinventing what a pickup would be like,” including the lineup, with the announcement. Drake said Ford expects a third of full-size pickup trucks sold in the United States to be fully electric by 2030.

Ford’s current F-Series lineup includes the F-150 and larger versions of the full-size truck as well as medium-duty trucks and chassis cabs for commercial buyers.

Farley and Drake compared the importance of the new electric vehicle factories to the series production of the company’s founder, Henry Ford, of the Model T, which made vehicles more affordable and accessible to the general public.

Ford had previously said it expected at least 40% of its global sales to be electric vehicles by the end of this decade. The target was announced before the Biden administration set a target last month for half of all new car sales to be electric vehicles, including plug-in hybrid models, by 2030.

In addition to manufacturing facilities, Ford has announced plans to invest $ 525 million over the next five years, including $ 90 million in a pilot program in Texas, to train qualified technicians in servicing electric vehicles. .

“This is just the beginning of our aspirations to lead America into the next century of sustainable transportation economy,” said Drake. “This investment catapults us to lead the electric revolution.”