Autos

Ford could produce its own EV battery cells by 2025, executive says

Key Points
  • Ford should be selling enough electric vehicles in North America to produce its own battery cells domestically by 2025, according to chief product platform and operations officer Hau Thai-Tang.
  • The timeline is the most detailed Ford has given for such production, but it doesn't mean the company will be producing battery cells by then.
  • Producing battery cells internally is expected to be key for automakers to cut costs of EVs and secure battery cells that power the vehicles.

In this article

People visit Ford's all-electric SUV Mustang Mach-E at the 2019 Los Angeles Auto Show in Los Angeles, the United States, Nov. 22, 2019.
Xinhua via Getty Images

DETROIT – Ford Motor should be selling enough electric vehicles in North America to produce its own battery cells domestically by 2025, an executive with the automaker told CNBC.

The timeline is the most detailed Ford has given for EV battery production, which Wall Street is closely watching, and it's a reversal in the company's strategy under former CEO Jim Hackett. Producing battery cells internally is expected to be key for automakers to cut costs of EVs and secure sourcing for an expected surge in demand this decade.

"We don't have to scale today to justify our own dedicated battery plant," Hau Thai-Tang, Ford's chief product platform and operations officer, said in an interview Monday morning. "But by 2025, as we bring on the F-150, the E-Transit and another battery electric vehicle that we've announced, we'll have enough volume in North America to justify our own plant."

The exact timing of production hinges on the EV market, consumer demand as well as R&D progress, according to Ford spokeswoman Jennifer Flake. The company, she said, "could be in a position" to be producing its own EV cells by 2025.

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Ford CEO on the production impact of global chip shortages

Ford's been cautiously adding EVs to its lineup, launching its first new all-electric car — the Mustang Mach-E — in the U.S. at the end of last year. The company expects to follow it with an all-electric Ford Transit van later this year and an EV version of the Ford F-150 pickup by mid-2022. The company has not disclosed details of another new EV mentioned by Thai-Tang.

Thai-Tang's comments come after the company announced Monday it would increase its investment in an EV battery start-up with hopes of starting to integrate the next-generation batteries, known as solid-state, into its EVs by the end of this decade.

Thai-Tang said a single battery cell facility could produce today's lithium-ion batteries as well as solid-state. The batteries can be lighter, with greater energy density that provides more range at a lower cost. But they are currently more costly than lithium-ion batteries and early in development.

Ford last week announced plans to invest $185 million into a new battery lab as a step toward manufacturing its own battery cells for EVs, but not full production like Tesla has or like General Motors has announced. Ford currently purchases cells from suppliers such as South Korea-based SK Innovation.

The new lab, as well as another $100 million battery facility that opened last year, is in addition to Ford's plans to put $22 billion into vehicle electrification from 2016 through 2025.

Ford's plan to manufacture battery cells has emerged under Ford CEO Jim Farley, who took over on Oct. 1. He changed the course set by his predecessor, Hackett, who had said the automaker saw "no advantage" in producing battery cells.

EVs represented only about 2% of new U.S. vehicle registrations last year, according to IHS Markit. But the company expects that to increase to between 25% and 30% by 2030 and 45% and 50% by 2035, IHS said.

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Ford's all-electric Mustang Mach-E makes its showroom debut