Ford to Increase Purchases of LG and SK Batteries... Diversifying Products, Also Contracting with China

[Image source=AP Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] U.S. automaker Ford has decided to purchase more Korean-made batteries from LG Energy Solution and SK On. To diversify its products, it also signed supply contracts with inexpensive Chinese battery companies.

Ford announced in a press release on the 21st (local time) that it has secured a total of 60 GWh (gigawatt-hours) of batteries, enough to produce 600,000 electric vehicles annually by the end of next year.

Ford plans to expand its electric vehicle production capacity to 600,000 units annually by the end of 2023 and 2 million units annually by the end of 2026. To achieve this, it signed supply contracts to purchase more batteries not only from its strategic partner SK On but also from LG Energy Solution.

Ford confirmed that LG Energy Solution will double the battery production capacity at its Poland plant to supply NCM (nickel-cobalt-manganese) batteries for the Mustang Mach-E and E-Transit. SK On will also increase the production of NCM batteries used in the Ford F-150 Lightning pickup truck and E-Transit at its Atlanta plant beyond the initial plan. Additionally, it will supply more battery cells made at its Hungary plant to Ford.

Furthermore, Ford confirmed that CATL (Contemporary Amperex Technology Co. Limited), the world's largest battery company based in China, will supply battery packs for the Mustang Mach-E and F-150 Lightning starting early 2024. Ford plans to diversify its products by securing lithium iron phosphate (LFP) batteries, which are cheaper than the existing NCM batteries.

There have been doubts in the market about whether global automakers like Ford can secure the batteries and raw materials needed to achieve their electric vehicle ambitions. Currently, Ford has secured about 70% of the battery capacity required to meet its 2026 target, according to the economic media CNBC.

Ford CEO Jim Farley said, "There is tremendous demand for Ford's new electric vehicle lineup," adding, "Now we are preparing to produce faster."