Ford, in step toward making battery cells, plans battery center in SE Michigan
Ford Motor Co. plans to open a global battery center in southeast Michigan — a significant step forward on the automaker's path to one day manufacturing its own battery cells to power a coming wave of electrified vehicles.
The Blue Oval on Tuesday announced the creation of "Ford Ion Park," what it describes as a "global battery center of excellence." The approximately 200,000-square-foot, $185 million facility is slated to open next year at a to-be-announced location in southeast Michigan, near other facilities where Ford employees develop, design and build products tied to electrification.
Though the automaker has not yet announced specific plans to build its own battery cells, the announcement sends a strong signal that such a move is forthcoming. Project leaders acknowledged as much during a call with reporters Tuesday.
"The formation of the Ford Ion Park team is a key enabler for Ford to vertically integrate and manufacture batteries in the future," said Hau Thai-Tang, Ford's chief product platform and operations officer. "It will help us better control our supply and deliver high-volume battery cells with greater range, lower cost and higher quality."
The move underscores both the automaker's more aggressive outlook on the electric vehicle market, as well as supply-chain challenges that have plagued Ford and other automakers since early 2020. Among them: supply and demand imbalances brought on by the coronavirus pandemic, a protracted global shortage of essential semiconductor chips, and a trade dispute between two top battery makers.
Ion Park will launch with a team of about 150 experts in battery technology development, research, manufacturing, planning, purchasing, quality and finance, according to Ford. Company officials said job numbers there could eventually grow.
The team will develop, test and build vehicle battery cells and cell arrays, focusing on lithium-ion batteries as well as looking at solid-state battery technology.
The work will be supported by a battery benchmarking and testing laboratory the automaker opened in Allen Park late last year. There, employees are researching and testing battery cell construction and chemistries and already have analyzed more than 150 different battery cells, according to Ford.
Michigan 'front and center'
"Ford's new global battery center is another indicator that the journey to electrification is moving swiftly — and Michigan will be front and center," U.S. Rep. Debbie Dingell, D-Deaborn, said in a statement applauding the announcement. "Ford Ion Park will help create and maintain good-paying union jobs for Michiganders and continue our state's leadership and competitiveness in building batteries and developing auto technology, without having to export any innovation or jobs overseas."
The auto industry's transition to electric vehicles has prompted concerns among autoworkers, as well as industry leaders and observers, about how the shift to less labor- and parts-intensive manufacturing processes will impact jobs.
Ford CEO Jim Farley has pointed to battery cell production as one way to shore up manufacturing jobs. "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?" he said in November, calling cell production "one of the obvious choices."
Meanwhile, Michigan Gov. Gretchen Whitmer said in a statement Tuesday that Ford's investment "will bolster our economy, attract innovative talent to Michigan, and help us continue to lead the world in advanced mobility and manufacturing."
And Gerald Kariem, a United Auto Workers vice president and director of the UAW Ford department, said Ion Park "will position Ford and UAW members and families to prosper for decades to come." The UAW has previously warned about the negative impact the shift could have on U.S. autoworkers, absent policies that promote domestic manufacturing by union workers.
"As we replace the internal combustion engine, we need to make sure that the jobs of tomorrow are good-paying union wage and benefit jobs going forward," Kariem added.
Protecting the supply chain
Experts expect a growing number of automakers will bring battery cell production in-house as the EV market grows.
For Ford, a greater sense of urgency might have been stoked by a recent trade dispute between South Korean companies SK Innovation Co. — a battery supplier for Volkswagen AG as well as Ford — and LG Chem. The dispute threatened Ford's battery supply, though a settlement between the two companies ultimately staved off an import ban SK would have faced.
Still, the incident highlighted the need to protect the supply of essential components, experts say.
"All of a sudden Ford and VW were like, 'Wait a second, we don't have any control over our battery production?' said Mike Ramsey, automotive analyst for Gartner Inc. "That's a very good demonstration of why you vertically integrate versus outsourcing."
And, experts say, the pandemic and related supply-chain disruptions have heightened awareness about the need to shore up EV supply sources and expand battery capacity.
Meanwhile, General Motors Co. already is investing billions in making its own battery cells. The Detroit automaker and LG Energy Solution recently announced plans to build a second battery cell plant in Tennessee. Ultium Cells LLC, the joint venture between the two, also is building a plant in northeast Ohio; both plants will use GM's proprietary Ultium battery technology.
And as yet another example, both Tesla, Inc. and Toyota Motor Corp. have partnered with Panasonic Corp. on battery production.
"The direction of the industry as a whole has been moving over the last year or two toward bringing more of the battery technology and cell technology in-house," said Sam Abuelsamid, principal research analyst at Guidehouse Insights.
Not enough battery capacity exists to support ramped-up EV production levels. And as automakers scale up, it begins to make better financial sense to bring at least battery production in-house, he said: "There's going to be enough scale for the automakers to justify the investment to do their own cell production."
Thus far, Ford has opted to source battery cells from suppliers — and officials said Tuesday that relationships with suppliers will remain important. But as the company introduces more EVs into its portfolio, it will need a range of supply options, officials said.
"In preparation for that next transition into the second phase, we want to give Ford the flexibility and optionality to eventually vertically integrate," said Thai-Tang.
Just this year, the automaker has made several moves to accelerate its EV plans, including increasing its EV investments to $22 billion through 2025.
"We will no longer take an approach of hedging our bets," Thai-Tang said. "We've accelerated our ambition, and we're much more bullish ... on how fast we think this transition is going to play out."