Ford 'discussing' making its own battery cells for EVs, CEO says

Jordyn Grzelewski
The Detroit News

As the automotive industry moves further along in its shift toward electric vehicles, automakers face the key decision of whether to produce the battery cells and packs that will help power millions of electric vehicles, or whether they want to buy them from suppliers.

General Motors Co. has opted to make its own EV components. It's joined up with LG Chem, for example, to mass-produce battery cells in Ohio. 

As recently as July, Ford Motor Co. executives said they had looked into producing their own batteries, but concluded the supply chain was strong enough to meet their needs.

Jim Farley, COO and incoming CEO, speaks unveils the new F-150 during a press conference this morning  at the historic Dearborn Truck Plant in the Rouge complex, Thursday, September 17, 2020, in Dearborn.

But newly-minted CEO Jim Farley struck a different tone Friday at an automotive summit hosted by Reuters, during which he hinted at the possibility of Ford one day making its own battery cells and packs: "Absolutely we're discussing it as a team," he said.

While there is nothing to announce yet, Farley said it's a "natural time" to have the discussion, as the Dearborn automaker's EV volume is set to grow exponentially with launches of the electric Mustang Mach-E SUV, E-Transit cargo van and F-150 coming between the end of this year and the end of 2022.

Such a move would help stymie job losses that the electric-vehicle transition is expected to bring: "We do have to solve for the reality that when electrification becomes 25% to 50% of our industry in the coming years, what are we going to do about the jobs?" Farley said. "One of the obvious choices is going into cell production, but it's a completely different animal than final assembly of a vehicle."

Additionally, he said, "What we're finding is that there's not a lot of capacity flexibility if you buy your batteries from someone else, and so there's a lot of other reasons beyond cost to make a move."

Meanwhile, in a separate interview at the Reuters event, Mark Reuss, president of General Motors Co., said the automaker's strategy of making EV components in-house gives them a "serious speed and cost advantage on mass production."

"The decision to do that keeps the manufacturing know-how of cells and packs in-house, and also provides speed that is incredibly important," he said.

Mark Reuss

The theme of both executives' remarks was the future of the auto industry, from the investments being made in digitally-connected vehicles, to the regulatory guidance the industry seeks as it pursues agendas dominated by zero-emission electric and autonomous vehicles.

Electric vehicles currently make up just a tiny fraction of new vehicle sales in the U.S., but industry experts expect the transition from gas-powered vehicles to accelerate in the coming years — and Detroit's automakers are placing big bets that EVs are the future of the industry, with tens of billions of dollars in EV investments slated over the next few years.

GM has embarked on a plan to eventually electrify its entire lineup, as it touts a future of zero crashes, zero emissions and zero traffic. The company plans to invest $20 billion in electric and autonomous vehicle technology by 2025, and to put 1 million EVs on the road by then.

The automaker recently made 3,000 new hires tied to its EV plans, and has announced new plant investments in Michigan and Tennessee to support EV production.

One "inflection point" GM sees coming in the near-term is the introduction of electric versions of high-volume crossover vehicles, Reuss said.

Farley described the industry as being in the "first inning" of the EV transition. The inflection point in the transition will come, he expects, once more than 25% of consumers in markets such as U.S. are driving EVs.

The auto industry is also investing heavily in self-driving vehicle technologies, which has prompted industry players to call for federal safety regulations as the technology advances.

"We have some competitors calling their system fully automated when it's not even close," said Farley, likely a reference to Tesla, which has gotten into trouble for making misleading claims about its vehicles' self-driving capabilities. 

"From my standpoint, and I think the company's standpoint, we would expect regulators to step into the void," he said. "It would be great if we had an industry agreement, but we're so competitive with each other to differentiate our brands, I'm not sure we could get to a common" standard.

Auto industry executives have also long pushed for a federal policy on fuel economy standards. The issue drove a wedge between automakers in recent years, as some automakers, including GM, sided with President Donald Trump's administration on lower standards, while others including Ford sided with the state of California and voluntarily committed to higher standards.

"We have to have a single standard," Farley said Friday. "We've lived in the past with multiple standards, and it's a nightmare for the customers, for the companies."

"We have a lot of OEMs that are advocates for electrification but they're not an advocate for more stringent standards. We're not in that situation," he said. "This new administration (under president-elect Joe Biden), I think they're going to take a very aggressive approach to CO2 reduction. I think Ford's probably very much in line with their thinking."

Having a "bifurcated strategy," Reuss said, "is hard, because we end up having to certify and do things different for different states." 

“There will be a change of people around the Biden administration, so we look forward to working with them to come up with that plan, if we can, of one national standard that drives us to zero emissions," he said. "So I think the door is open here and we look forward to working with them.”

Twitter: @JGrzelewski