Ford secures multiple lithium deals to make 2 million EVs by 2026

Peng Chen, DIGITIMES Asia, Taipei 0

Credit: AFP

Ford Motors announced several agreements with lithium companies on May 22, a step forward to support its EV ambitions. The carmaker also aims to achieve a margin of 8% of earnings before interest and taxes (EBIT) for its EV business segment by late 2026.

Ford held a capital markets event on Monday. The company said its EV sales grew by 41% to 10,866 units in the first quarter of this year. It plans to produce 2 million EVs by the end of 2026, a 16-time increase from 2022.

Ford revealed multiple lithium supply deals that will facilitate its battery supply. For example, US-based Albemarle Corp will offer Ford over 100,000 metric tons of lithium hydroxide, enough to make 3 million EV batteries, over a five-year course starting in 2026.

The automaker also secured a lithium hydroxide deal with Nemaska Lithium. According to Reuters, Nemaska Lithium is equally owned by the Quebec government in Canada and the US-based company Livent.

Moreover, EnergySource Minerals will supply Ford with lithium hydroxide from a site in California, expected to be commissioned in 2025.

Ford said it signed a five-year agreement with Compass Minerals to receive lithium carbonate from the latter's project in Utah. The carmaker also secured a long-term contract with Chile-based SQM, the world's second-largest lithium producer.

While some competitors seek larger batteries to provide a longer driving range, Ford cares more about the battery's efficiency. Electek reported that the company focuses on smaller batteries using fewer resources but performing better. It said it has accumulated 240 GWh of battery cell capacity globally for the EV boost.

Ford has divided its business into three segments. On May 22, the company said it aims to reach a total adjusted EBIT margin of 10% in 2026. Ford Blue, which focuses on gas-powered and hybrid vehicles, will target a low double-digits EBIT margin, while Ford Pro, responsible for commercial vehicles, is aiming for a mid-teens margin.

Ford added that the EV segment, Ford Model e, will likely reach an EBIT margin of 8% by late 2026. It said the segment is expected to lose US$3 billion in 2023, as previously announced.

According to Reuters, one of the challenges that Ford must overcome in order to achieve better profitability is shrinking its costs. The company estimated its total costs are US$7 billion higher than competitors. Ford CEO Jim Farley also said it is "so far behind" on waste and cost.