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Ford to spend record $11.4 bil on US electric truck, battery plants

29 September 2021 Keiron Greenhalgh

Automaker Ford is to set to build its first US greenfield vehicle assembly plant without a partner in more than half a century, with all of the production to be electric vehicles (EVs), it said this week.

The plant will be part of an $11.4-billion investment package that will include a separate battery complex with South Korean partner SK Innovation.

As part of the company's largest ever investment, Blue Oval City, as the Tennessee assembly plant will be known, will be the first such solo Ford site to begin operations since the Kentucky Truck Plant opened in 1969, Ford spokeswoman Jennifer Flake said in an email 29 September.

"This is a transformative moment where Ford will lead America's transition to electric vehicles and usher in a new era of clean, carbon-neutral manufacturing," Ford Executive Chair Bill Ford said in a statement.

The new plants are part of company plans for capital expenditure in excess of $30 billion on EVs through 2025.

Ford's decision to build an all-EV plant aligns with its 5 August commitment to President Joe Biden for EVs to account for 40-50% of their annual US volumes by 2030.

IHS Markit Principal Research Analyst Stephanie Brinley said it is difficult to underestimate the significance of the announcement. Blue Oval City will involve Ford rethinking its manufacturing processes, she added.

The $5.6-billion Blue Oval City campus in Stanton, Tennessee, will host assembly of an expanded lineup of electric F-Series trucks, the company said. The company's conventionally fueled F-150 truck is the best-selling automobile in the US. Production at the site is expected to start in 2025, it added.

Also, the Stanton facility will include a BlueOvalSK battery plant, buildings for key suppliers, and recycling. The plant is designed to be carbon neutral with zero waste to landfill once fully operational, Ford said.

Environmental considerations influenced the decision on where to locate the plant. The site was chosen in part because of the opportunity to use local renewable energy sources such as geothermal, solar and wind power, the company said.

Ford also aims to minimize the environmental footprint of the site by partnering with Redwood Materials on recycling batteries. Redwood Materials was founded by Tesla Co-founder JB Straubel.

The scale and cost of the investment program announced by Ford this week, as well as the plan for the F-Series EV to be the cornerstone of Blue Oval City, indicates Ford's commitment both to its EV transition and to the F-Series, said Brinley.

Kentucky battery park

Alongside the Tennessee investment, Ford plans to build a dedicated battery manufacturing complex in Kentucky with SK Innovation—the $5.8 billion BlueOvalSK Battery Park. Twin plants at the site are set to supply North American assembly plants with batteries for Ford and Lincoln EVs.

Long-time partners Ford and SK Innovation plan to open the manufacturing campus in Glendale, Kentucky, in 2025. Kentucky Governor Andy Beshear said the facility would be the "single largest investment in the history of our state."

The Kentucky plants will be capable of producing up to 43 GWh of batteries each a year. Alongside the capacity of the Stanton facility, the partnership will have a battery production capacity totaling 129 GWh in 2025, more than double Ford's target of 60 GWh announced in May.

SK Innovation intends to build about 200 GWh of annual battery capacity in North America to supply Ford and other automakers.

In March 2019, SK Innovation broke ground in Georgia on a factory that would manufacture 9.8 GWh/year of batteries for EVs, and the same year announced plans for a second even bigger plant in the state.

Those SK Innovation plants' prospects were shaky for a while as the company battled rival South Korean battery giant LG Energy Solution in court. The companies agreed to settle all legal disputes in South Korea and US ahead of an 11 April deadline for Biden to overturn a US International Trade Commission ruling via presidential veto.

Opportunities

Biden, a Democrat, has barreled ahead with investment plans for the EV ecosystem and the wider energy transition since assuming office in January, often provoking accusations of spendthrift budgeting from across the political aisle. But Republican lawmakers from both states welcomed the Ford announcement.

"Ford's investment in the [Memphis Regional Megasite] will bring in thousands of jobs and will reshape West Tennessee's economy for generations to come," Representative David Kustoff, Republican-Tennessee, said 27 September.

US Senate Minority Leader Mitch McConnell, one of two Kentucky senators, added: "I look forward to continuing to pursue pro-business policies in Kentucky and nationwide that will allow great American companies like Ford to continue to prosper and grow our economy."

The plan could also ease pressure on the global supply chain for batteries, which the Biden administration identified in February as a concern as it seeks to support the energy transition.

Environmental activists, typically at loggerheads with congressional Republicans across a multitude of arenas, also saw the benefits.

"If anyone was still wondering whether the electric vehicle revolution is real, Ford emphatically answered that question today," Environmental Defense Fund President Fred Krupp said 27 September. "The transformative commitments and action from leading US automakers such as Ford and General Motors (GM) have made the transition to clean transportation inevitable."

Krupp said he hoped the announcement inspires members of Congress to bring their discussions on infrastructure and budget reconciliation to a successful close "by acting with the same courage and vision that Ford has shown today."

By a vote of 69 to 30, the US Senate on 10 August passed a downsized $1.2-trillion infrastructure plan, HR 3684. The House of Representatives is set to vote on the bill 30 September. It includes $7.5 billion for a national EV-charging network as well as $5 billion to acquire zero-emission and low-emissions buses and another $2.5 billion for low-emissions ferries.

Progressives on the Democratic side of the House have been shying away from voting on the bipartisan infrastructure legislation if they can't also pass a separate $3.5 trillion spending bill that would revamp US programs protecting low-income segments of society and raise taxes on the wealthy to cover some of the cost of the new spending.

Detroit pursues EV goals

The spending bill would be historic in size, much like the transformation underway in the US auto industry as it transitions to EVs. As McConnell noted, Ford's Detroit-based rivals are also striding ahead with plans for EV models.

GM on 28 January said it intended to sell only electric versions of its light-duty vehicles by 2035. Earlier in January, GM CEO Mary Barra pledged the company would be carbon neutral by 2040. Stellantis, which owns Fiat Chrysler and Europe-centric brands such as Peugeot, Opel, and Vauxhall, said on 29 January it will debut 10 EV and hybrid models by 2025.

Biden, meantime, said he intends to redirect future US fleet vehicle purchases to just be EVs, as part of a "Buy America" executive order. This could result in more than 650,000 light-duty vehicles and trucks going electric over a number of years.

Posted 29 September 2021 by Keiron Greenhalgh, Editor, Climate & Sustainability Group, IHS Markit

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