American carmaker Ford and German giant Mercedes made it clear on either side of the Atlantic this week that current events would not stop their electric vehicle push, which both (like so many other current makers) believe are the future for motoring and transport.
EV van maker Rivian, on the other hand, is stuck in the slow lane, forced to wind back its ambitious production schedule.
Ford revealed plans for a major assault on the European electric vehicle (EV) market, following Tesla into what will be an increasingly competitive battle for success.
Tesla has just gained final approval to start its huge $US5.5 billion German factory in Berlin and rival car makers, led by Renault/Nissan and Mitsubishi as well as Stellantis, BMW and Mercedes and Volvo have already started turning out EVs, or are advanced in their plans to do so.
Ford has plans to launch seven new electric models in Europe by 2024, a battery-assembly site in Germany and a nickel cell manufacturing joint venture in Turkey as part of its multi-billion-dollar major electric vehicle (EV) push on the continent.
This will include significant investments of $US2 billion at Ford’s major Cologne site in Germany as well as a new battery assembly facility scheduled to start operations in 2024.
“Our march toward an all-electric future is an absolute necessity for Ford to meet the mobility needs of customers across a transforming Europe,” said Stuart Rowley, chair of Ford of Europe.
Ford said it would introduce three new electric passenger vehicles and four new electric commercial vehicles in Europe by 2024, adding it plans to sell more than 600,000 EVs in the region by 2026.
Ford said this many sales would help it reach its global goal of selling more than 2 million EVs a year globally and achieving an adjusted operating profit margin of 10% by 2026.
The European strategy update came a week or so after Ford announced a $US50 billion investment push to kick-start its electrification that also includes running its EV unit separately from the group’s legacy combustion engine business.
A big part of the EV push sees Ford deepening its existing partnership with Volkswagen which will see the US company making a second electric vehicle for the European market based on its German rival’s EV platform.
That will mean Ford will double its planned volume of vehicles to be produced based on Volkswagen’s modular electric-drive platform, known as MEB, to 1.2 million units over a six-year period
Ford also said it has signed a non-binding memorandum of understanding with SK On Co, part of South Korea’s SK Innovation, and Turkey’s Koc Holding for a joint venture to manufacture high nickel NMC cells for assembly into battery array modules.
That will see Ford Otosan – Ford’s joint venture with Koc Holding – buying Ford’s plant in Craiova, Romania for $US630 million to further boost electric and commercial vehicle capacity.
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Meanwhile Mercedes-Benz CEO Ola Kaellenius was in the US for the opening of its first electric vehicle (EV) battery factory and made it clear the company’s $US44 billion EV plan would not be diverted
Batteries and at least two new all electric Sports Utility Vehicles (SUVs) are planned for the company’s plants in Alabama.
Mercedes is working with suppliers in Ukraine whose operations have been disrupted, he added, but it was “too early to tell what the wider ramifications will be.” Other European carmakers such as BMW are in a similar position.
Existing and new car makers with EV ambitions are facing higher inflation, rising commodity costs (lithium, copper, nickel) and an end to the loose monetary policy settings for most central banks which has allowed cheap money to finance an aggressive move into EVs.
Russia is a key producer of commodities such as nickel, palladium and platinum and the continuing shortage of computer chips is slowing the switch or making it more expensive.
Tesla has lifted its pricing in the US twice in the past week and Chinese manufacturer, BYD revealed plans a day after Tesla for a price rise.
Unlike Ford with its split into an ‘old’ car company with its ICE engines and the new business based on EVs, Mercedes will not follow, even though Daimler Truck split from Mercedes in December
“There is only one Mercedes-Benz and that one company sooner than many people think will be an all-electric company,” Kaellenius told Reuters
Mercedes also said on Tuesday that Japanese battery maker Envision AESC would supply battery modules for US-made Mercedes EVs from a new US plant by the middle of the decade.
As well as the launch of its Alabama, battery plant, Mercedes also previewed a large new electric SUV to be built at a nearby Alabama, assembly facility this year.
The EQS SUV and a smaller EQE electric SUV, also to be made in Alabama, join a growing lineup of electric SUVs seeking to challenge Tesla in the US, China and Europe.
The new plant will supply batteries for the EQS and EQE SUVs, which will be built for sale in the US and for exports. Mercedes said it spent about $US1 billion on the battery plant and to upgrade the assembly line in Tuscaloosa to make electric vehicles.
The Alabama battery plant will make lithium-ion batteries with an advanced chemistry that contains nickel, cobalt and manganese, Mercedes said.
Under its 40-billion-euro plan Mercedes will produce EV batteries in Europe, North America and Asia and eventually wants to have eight cell factories with partners around the world with capacity to produce 200 gigawatt hours a year by the end of the decade.
The Mercedes Alabama assembly plant can build both electric and internal combustion vehicles, and is one of the largest Mercedes vehicle-making plants in the world.
What investors should take from this news is that demand for key metals Australia produces such as lithium, rare earths, nickel, copper, gold and down the track, PGEs will not be easing anytime soon and that these big global companies are now locked into radically changing their futures.
Commodity prices will rise and fall – they are driven by markets, supply and demand and sentiment – especially lithium as more producers get into actual production and processing.
But the renewable future is getting bigger and bigger in the windscreen and not even Vlad Putin can alter that – in fact his invasion and other tactics have probably given an enormous boost to EVs as even the most thick-headed government and denialists realises that energy security is vastly improved by going down the renewables route.
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Even though the war in Russia is not a direct influence, one-time boom electric truck maker Rivian is doing it tough.
Its fourth quarter report underwhelmed investors which saw the shares sold off and as a result they are down 65% year to date while the wider market is off around 12%.
It looks like it has slashed its ambitious start up production forecasts in half.
A combination of supply chain (computer chips) delays – which have hit all other producers -and the sluggishness in getting a start up company up to speed seem to be dragging Rivian down.
Rivian said it expects to produce 25,000 electric trucks and SUVs this year, as the start-up battles through supply chain constraints and internal production snags.
That would be just half of the vehicle production it forecast to investors last year as part of its float roadshow.
“In the immediate term, we are not immune to the supply chain issues that have challenged the entire industry. Those issues, which we believe will continue through at least 2022, have added a layer of complexity to our production ramp-up,” the company said in a shareholder letter.
Rivian said reservations for its vehicles have reached about 83,000 as of March 8, up from 71,000 in December.
A planned increase in production will come alongside an adjusted operating loss of $US4.75 billion and capital expenditures of $US2.6 billion this year, the company forecast in its 4th quarter figures last month.
Rivian reported an adjusted operating loss of $US2.8 billion for 2021, including $US1.1 billion in the fourth quarter, marking significantly wider losses than a year-ago.
Its net loss for 2021 came in at $US4.7 billion, including $US2.5 billion during last quarter.
The company didn’t offer revenue guidance for 2022, though market forecasts have the company earning revenues of around $US3.16 billion.
Rivian though is financial strong – it had $US18.4 billion in cash on hand at the end of 2021 and expects capital expenditures to total about $US8 billion through the end of 2023.
The company previously set an annual production goal of 150,000 vehicles by the end of next year.
Rivian says it would be capable of producing more than 50,000 units this year if there are no problems in the supply chain.
