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GM new Lordstown, OH battery plant and Ford's need for future battery packs

Billyk24

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The huge Lordstown, Ohio GM battery plant under construction is to be up and running in 2022. Would Ford be interested in obtaining battery packs from such a location? Or does Ford need to create their own plant?
 

dbsb3233

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Hard to say if Ford will consider building their own or just keep buying from 3rd party makers. I'm guessing the latter.

My jaw dropped when I read this number... There are 115 battery gigafactories now planned around the world...

https://www.benchmarkminerals.com/e...-megafactories-europe-sees-most-rapid-growth/

Tesla has had an advantage by building their own factory, but that was in the decade where battery supply was scarce. There's so many planned now that I wonder if that might actually turn upside-down -- so much supply by mid-decade that it might become cheaper to buy from the 3rd party makers at market price than to make your own.

Maybe that's a reach, but with so much more supply, prices will likely come down.
 
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Badger_Prof

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Why doesn't Ford build tires? There are at least four of those included with every vehicle they sell. Why doesn't Ford make glass? There is a lot of that included with every vehicle they sell. etc. I think one of the reasons is that those are not a part of Ford's core business and they have decided they can be more competitive and make more money by focusing on vehicle design, assembly, and maintenance. The same might be true about batteries. They may be deciding to put their investments into the design of vehicles, assembly, etc. rather than investing in the design, development, and operation of a battery facility--a technology where they have very little experience. Maybe some of each. Or, as I think you are suggesting, they might just be short-sighted as part of the explanation.
 

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Valid point. On the other hand another explanation for why Ford makes engines is that their core expertise includes the design and assembly of engines. The majority of the parts that go into a Ford engine were actually made by suppliers. Clearly, more than "the majority" of Ford's EV drivetrain is made by suppliers. I agree with you that constitutes a risk for Ford. A common (smart) business practice for a company that lacks expertise in an area is to establish a joint venture or a strategic alliance with a company that has existing expertise in the area where expertise is lacking. That might be a smart starting point for Ford.
 

dbsb3233

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Except that LG Chem, SKI, China companies, and others are DRAMATICALLY expanding to build battery gigaplants all over the world now. Including inside the US.

You're right that over the last half decade (roughly the point where battery technology got good enough to produce a long range car at a sellable price), battery supply was a huge limiting factor. Including for the 2021 MME. But that's changing fast. There's a whopping 115 battery plants planned around the world according to this report:

https://www.benchmarkminerals.com/e...-megafactories-europe-sees-most-rapid-growth/

So while that WAS the case in recent years, the market is rushing to fill that void, and should catch up fast.

BTW, latest word from one Ford insider was that the MME batteries are now coming from a S Korea LG Chem plant, not the Poland one as originally planned.
 

dbsb3233

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Valid point. On the other hand another explanation for why Ford makes engines is that their core expertise includes the design and assembly of engines. The majority of the parts that go into a Ford engine were actually made by suppliers. Clearly, more than "the majority" of Ford's EV drivetrain is made by suppliers. I agree with you that constitutes a risk for Ford. A common (smart) business practice for a company that lacks expertise in an area is to establish a joint venture or a strategic alliance with a company that has existing expertise in the area where expertise is lacking. That might be a smart starting point for Ford.
Plus, EVERY automaker uses a wide variety of parts from suppliers. Even Tesla.

And even the ones that "make their own" components still rely on suppliers for raw materials. Tesla may partner with Panasonic to build their own batteries, but they're still dependent on suppliers for a steady stream of lithium, cobalt, and other raw materials. Just as GM will be for their LG Chem partnered plant in Ohio. And just as Ford would be if they built their own.
 

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I agree that, at the moment, it could be advantageous to control the supply of this critical component (batteries). An important question is whether that will continue to be the case and will merit the re-direction of massive amounts of capital into the design, development, and production capacity to produce batteries or if others will take care of that part of the supply chain. The answer is.... well, the answer is nobody knows.
 

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I've spent the majority of my career in supply chain and spent a lot of time with Ford's Material Planning & Logistics team a few years back. Battery issues are no different than others faced by Ford and other OEMs. Ask a materials manager about the consequences of the Evonik factory fire sometime. Yet, Ford doesn't make its own resins, either.

Ford doesn't think it needs battery expertise at this point in the technology cycle to be competitive. GM and Tesla see things differently. It's a matter of business and product strategy, and only over the long term will anyone know which was the right one - and the answer could also be "both" and "neither."
 

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An example of Ford partnering with someone: All of Ford's new 10 speed transmisstions are the result of a joint R&D project with GM (and thus all of GM's new 10 speeds are also the result of that collaboration).

So here is an example of not only Ford using its expertise but also getting some from a competitor. Not only sharing expertise but I would bet it was a big cost save having your competitor pay for 1/2 the development as well.
 

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Tesla buys its batteries from Panasonic in US and Panasconic, CATL and LG in China.
 



 









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