Ford and GM Are Competing on EV Investments

Update 10/18/21: Stellantis announced a partnership with battery maker LG to produce lithium-ion battery cells and modules in North America. That announcement didn’t include a location for the plant, but it did set 2024 s a target start date. Stellantis, parent company of Dodge, Jeep, and Ram, has previously stated its goal to have a zero-emission vehicle in every SUV segment by 2025.

Separately, Toyota announced it will spend $1.3 billion, part of a larger $3.4 billion, nine-year investment plan, to set up a U.S. lithium-ion-battery plant to supply U.S.-market hybrid and electric vehicles. That plant is set to start production in 2025. Read about both announcements right here.

It seems a week doesn’t go by anymore without a new, multibillion-dollar announcement by an excited automaker flashing cash and previewing its electric-car plans.

Last week, GM released a slew of promises, new lines of business (mostly using EVs), in-car commerce, and more. The headline was that it plans to double its top-line revenue by 2030. The week before, Ford announced it would spend more than $11 billion on a new assembly plant and associated battery-manufacturing site in Tennessee, to be called Blue Oval City—and a second battery plant next door in Kentucky, as well.

Plans and announcements from carmakers come and go, but these two are important both for the size of the investments and their focus on EVs. It’s clear that the 2020s will be the decade when the world’s auto industry began a serious transition from combustion engines to electric power, even though right now EVs are just 2 to 3 percent of the global market. To build EVs in volume, carmakers need to be closer to the development and production of the battery cells that power them—just as they’ve been intimately involved in engine development for a century. And that’s what these announcements signal.

Tesla saw it first

As always, Tesla came first: CEO Elon Musk said way back in November 2013 that the company would need to build a “gigafactory” to produce huge volumes of battery cells—and then it would need several more. Now GM and Ford have followed Musk’s lead, suggesting that rather than buying their cells from third-party suppliers (LG Energy Solution for GM, SK Innovation for Ford), they want to co-own and operate the plants and processes that make them.

Ford’s late-September announcement that it would spend $11.4 billion building a new EV production plant and two battery plants represents the largest single commitment to green-field facilities in the company’s history. They will power, the company says, a “new lineup of Ford and Lincoln EVs” that likely includes the F-150 Lightning pickup, a Lincoln derivative of the Ford Mustang Mach-E electric crossover, and several more vehicles.

Blue Oval City in Stanton, Tennessee, will cover almost six square miles and employ 6000 people. It includes both a plant to assemble the Lightning—for which Ford says it has already taken 150,000 reservations—and one for the associated batteries, starting in 2025. A second “BlueOvalSK” battery plant in Glendale, Kentucky, will add 5000 more jobs. Together, the battery plants could annually produce enough cells for almost 1.3 million EVs with 100-kilowatt-hour packs. Note that Ford delivered 2.4 million vehicles in 2019, the last normal year for vehicle sales before COVID arrived and the ongoing chip shortage began.

Keeping up with the Joneses

The significance of Ford’s plans is that it brings the company within reach of GM, which is already building a pair of joint-venture battery plants with its partner LG: one in Lordstown, Ohio, the other in Spring Hill, Tennessee. The first should start producing cells in the second half of 2022, with Tennessee following shortly thereafter. GM is expected to announce at least two more cell plants as it rolls out an ambitious portfolio of EVs in multiple sizes and shapes, sold by all four of its U.S. brands. (The 2022 GMC Hummer EV this fall will be the first, followed by the 2023 Cadillac Lyriq.)

Last week’s broader GM announcements had a few new EV nuggets, including that the electric version of the Chevrolet Silverado full-size pickup will be unveiled January 5 at the Consumer Electronics Show. It will have a standard glass roof and offer 400 miles of range.

More broadly, GM said half its factories will be capable of EV production by 2030, and it plans to be the U.S. leader in EV market share that year. Asked how it expected to get there, GM president Mark Reuss hedged, noting that depends on what Tesla—which has led in market share for seven years—may have in the pipeline. Contributing to the doubling of revenue, GM said, will be EV sales that bring new customers rather than substituting for its current buyers.

Why this matters

While GM has the most experience in EVs of the Detroit 2.5, it tends to create vehicles and then cancel them. The ongoing, painful, drawn-out Bolt EV battery recall hasn’t helped matters. But its latest Ultium plans are huge, and it “aspires” to sell entirely EVs for light-duty vehicles by 2035.

Ford in the 2010s, on the other hand, had only the uncompetitive, uncompelling Focus Electric. That changed with the 2021 Mustang Mach-E. Now its plans for new battery plants, a dedicated EV factory, and the widespread interest in the electric F-150 indicate the company is wasting no time in planning its own EV transition.

Which leaves only one question: When will Stellantis announce its own EVs suitable for North American buyers—and the battery plants to feed them? Over to you, Auburn Hills.

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