Ford and Tesla have struck a technology deal that could trigger a major change for US electric vehicles and confer market leader status to Tesla for a while to come.
At the end of a big week for Ford as it sold both its current position in the EV transition and its way of getting to the renewable future, it and Tesla have agreed on a new charging agreement.
From next year more than 12,000 Tesla Superchargers will be operational with Ford vehicles.
That means the maker of the top two selling US EVs will now move to a sharing arrangement for charging.
US law mandates that all EV changing devices have to be made in America, which means foreign EVs from the likes of Hyundai, Toyota, Mercedes and BMW, as well as from Chinese companies, must install US made charging devices before being sold in America.
Ford CEO Jim Farley also announced that next-generation Ford EVs would come equipped with the North American Charging Standard (NACS) port, Tesla’s standardised version of its proprietary charging system.
“We don’t want Tesla superchargers to be a walled garden,” Tesla CEO Elon Musk said on Twitter. According to Musk, Tesla wants Ford and other automakers to be on an equal footing when it comes to access to dependable EV charging, and so does the American government which has mandated that outcome (and provided $US7.5 billion to erect a national chain of charging stations and associated infrastructure).
According to Ford, Tesla will develop an adapter that will be provided to customers who buy any of Ford’s EVs, including the F-150 Lightning truck, Mustang Mach-E, and E-Transit delivery van.
Ford has some of the best-selling EVs (number two, to be exact), but it’s been hurt by manufacturing problems that included faulty batteries (As has General Motors with its Chevy Volt first edition) that could catch fire (that issue was addressed, but it stalled production of the Lightning truck for a while). Mustang Mach-E production was also stalled for weeks as the company improved processes at the plant
Like most EVs now on the road in North America, Ford’s EVs are compatible with EV chargers with CCS (Combined Charging System) plugs.
The adapter will allow Ford EVs to connect with Tesla’s Superchargers, including the Version 3 chargers that have just started be sold by Musk’s company.
Ford’s next-generation EV platform in 2025, will be compatible with Tesla’s North American Charging Standard port.
This deal is part of the 2022 announcement by Tesla that it would open up its charging standard to other automakers last year.
Ford is one of the first companies to take it up, which will help sell its vehicles with an assurance of ease of charging at more points across the US.
It also gives Tesla a key central role in the future of the US EV market.
Ford will also continue to support its “BlueOval” charging network, which will grow another 1,800 DC fast charging stations by early 2024.
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The announcement of the charging deal with Tesla should help settle constant murmurings from investment analysts about Ford’s path down the EV road.
It came at the end of two days of presentations by Ford bosses about its current trading position and its EV future.
Ford had news of three new lithium supply deals (that could touch Australian based suppliers) in the latest details of its $US50 billion transition to an electric future.
And it would be fair to say there’s some scepticism among analysts about Ford and its cost cutting ambitions and the transition.
That scepticism was recognised by Ford, as the company’s chief financial officer admitted to the investor day:
“You’re not going to believe us until we start delivering it,” CFO John Lawler said. “Because we’ve told you this before. That’s the truth. We have and we haven’t delivered. So we have to prove it. We can talk about it, but we have to prove it.”
Ford has estimated its total costs are $US7 billion higher than its competition which adds to the investor queries.
“We’re so far behind on waste and cost,” Ford CEO Jim Farley told the investor day briefing.
In February, Ford predicted a difficult 2023, blaming chip shortages and other supply chain issues and production “instabilities” that raised costs.
With Tesla the biggest seller in Australia, its chargers could end up as the de facto industry standard, which would further entrench the company in Australia’s EV transition.
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Ford’s lithium supply deals could see Australian-produced lithium sold to the carmaker by Allkem (and its merger partner, Livent), the Wesfarmers/SQM Mount Holland mine in WA and from Albemarle’s growing lithium and hydroxide operations, also in WA.
The three new supply deals for battery-grade lithium that Ford announced will be a key part of the carmaker reaching its target of producing 2 million electric vehicles by 2026.
These were struck with Albemarle, Nemaska Lithium (a new start up) and SQM. Albemarle and SQM are the two biggest lithium producers globally with growing investments in Australia.
Carmakers the world over (even in China) are racing to secure supplies of battery materials to boost EV output as demand surges, and to take advantage of US tax credits flowing from the ground-breaking Inflation Reduction Act.
Processing is the “limiting factor,” Ford’s CEO told Bloomberg
“The mining part is not the constraint. It’s really the processing,” Farley said in an interview on Bloomberg Television.
“So turning those raw materials, especially lithium and nickel, into processed materials we can put into a slurry to make the cells themselves.”
That’s why Musk’s Tesla has started work on a hydroxide refinery in Texas that won’t start producing until 205 or early 2026. It will have an initial capacity of a at least 50,000 tonnes a year which would be similar to the capacity of the first two trains at Albemarle’s WA refinery at Kemerton.
The processing constraints are also political, Farley said, since 80% of the processing is now done in China.
“Onshoring the processing is going to be the most important controller of cost and also politics,” the CEO said. “Eighty percent of the processing for nickel and lithium are being done in China and we need to localise that,” he said.
And the Biden administration is doing just that with its $US369 billion worth of subsidies in the Inflation Reduction Act of 2022 which is aimed at excluding from the US renewable materials and products made in China or using substantial amounts of Chinese sourced materials.
Ford is spending $US3.5 billion on a lithium-iron-phosphate battery plant in the US state of Michigan that is due to start producing from 2026. The company agreed in March to take a direct stake in a battery-nickel plant under construction in Indonesia, and last year sealed a pact with Liontown Resources, which Albemarle is trying to buy on the cheap for $2.50 a share.
Albemarle Corp and Nemaska Lithium will supply lithium hydroxide to Ford, a primary ingredient in the cathode of lithium-ion batteries, over five and 11 years respectively. That’s produced from rock which is broken down into spodumene (which is the Australian lithium source).
Albemarle will supply more than 100,000 tonnes of lithium hydroxide for about 3 million future EV batteries for Ford.
Some of that will come from the two trains the company is building in WA – two of the four were announced earlier this month at a cost of $US1 billion.
SQM will supply from Chile and possibly Australia.
Nemaska Lithium is equally owned by the Quebec government’s economic development agency Investissement Quebec and US lithium company Livent which is merging with Allkem in a near $A16 billion deal. Ford will be its first customer.
Chile’s SQM, the world’s second-largest lithium producer after Albemarle, signed its own long-term supply agreement with Ford on Monday. SQM also has lithium interests in Australia, headed by the 50% stake in the Mount holland mine in WA (with Wesfarmers holding the other 50%) and plans for a hydroxide refinery in Kwinana.
Ford is also having a side bet on direct lithium extraction (DLE) technology, one of emerging group unproven filtration technologies aimed at revolutionising how the metal is produced for the EV industry.
The Chilean government’s recent moves to assert greater control over its lithium industry (extracted from brine at a cost of using huge amount of water in desert like areas of the country) seem to be based on moving to direct extraction from the brine and cutting the amount of water wasted
Ford Vice President Lisa Drake said the agreements carried significantly less risk that relying on investments in junior producers.
Under other deals, privately held EnergySource Minerals will supply Ford with lithium hydroxide from its Imperial Valley, California site, which is expected to be operational in 2025, it said, while Compass Minerals will provide lithium carbonate (from brine). These are all small US companies.
But important as all these details are for the future, the charger sharing deal with Tesla cannot be underestimated in the long term.
