On Wednesday, Ford CEO Jim Farley told attendees of the Wolfe Research Auto Conference that the United States needs to start building batteries for the industry’s planned deluge of electric vehicles now that semiconductor shortages have revealed the dangers of needing to source essential components from the other side of the planet.
Farley is likely correct in stating that America really should be able to supply itself, and not just in regard to semiconductor chips. Pandemic-related lockdowns crippled countless industries by upsetting the balance of supply lines. Halfway through 2020, farmers were dumping millions of gallons of milk per day and plowing up fields of eatable vegetables as restaurants were shutdown; factories were idled as part shortages became commonplace; cleaning supplies and disinfectants became impossible to find.
But it’s hard to translate that into sympathy for Ford because, while all of the above was happening, the automaker’s leadership was saying that there was no good reason to manufacture its own batteries.
“The [battery] supply chain has ramped up since Elon [Musk] built his Gigafactory, and so there’s plenty there that does not warrant us to migrate our capital into owning our own factory,” former Ford CEO Jim Hackett said during the company’s second-quarter earnings call, held in August. “There’s no advantage in the ownership in terms of cost or sourcing.”
But that was before South Korea’s SK Innovation lost a courtroom battle with rival LG Chem over intellectual property rights. The International Trade Commission decision bans SK Innovation from importing batteries to the U.S. for ten years, providing a four-year grace period where it can legally import components. Ford has an agreement with the supplier that has it furnishing batteries for the plug-in F-150 that’s coming in 2022.
“We need to bring large-scale battery production to the U.S., and we’ll be talking to the government about [that],” Farley was quoted by Bloomberg as saying during the Wolfe Research Auto Conference. “We can’t go through what we’re doing with chips right now with Taiwan. It’s just too important.”
Leaning on Taiwan to supply an industry that’s cramming chips into every inch of its products during an uncertain period could have also been avoided if the United States maintained. But national self-reliance never seemed to be on the radar of anybody important, not when the work could be done more cheaply elsewhere and components could be shipped in by boat.
President Joe Biden spent part of his week meeting with lawmakers to discuss how to secure supplies of electric vehicle batteries, semiconductors, rare earth metals, and pharmaceuticals — all of which have been in short supply since the pandemic disrupted global trade.
Meanwhile, Ford’s current CEO used his time at the conference to reiterate the corporate strategy. The manufacturer wants to develop new, more affordable EV platforms for use in China and Europe while preparing the United States for its first run of all-electric pickups. It also plans on turning digital services (especially in regard to fleet management) into a more reliable revenue source as it continues to make its vehicles increasingly connected. This opens it up to marketing opportunities and sourcing customer data that have proven highly lucrative, albeit slightly unsavory from our privacy-biased perspective.
Regardless, it sounds like the automaker is going to need a massive amount of semiconductors and batteries that it cannot currently produce for itself. But it’s not going to be fighting for those components in a vacuum, as several of the world’s largest automakers have found themselves in a similar situation where they’ve promised to pivot toward electric vehicles and mobility without having a way of sourcing the necessary parts.
[Image: Ford Motor Co.]
