Ford Motor Co. said it will use lower performance batteries for select models in order to meet its electric-vehicle targets, the latest example of how global ambitions to cut greenhouse gas emissions are colliding with the reality of supply chain constraints.
In the coming years, Ford said it will offer two versions of the Mustang Mach-E and the F-150 Lightning — a standard version and a vehicle with extended range.
The extended range versions will have lithium-ion batteries that use the nickel, cobalt, and manganese chemistry that has become an industry benchmark. The standard version will use cheaper batteries, a second-best alternative that Ford’s leaders decided was the best way to keep up with growing demand for electric vehicles.
Ford said on July 21 that it had struck an agreement to import lithium-iron-phosphate batteries from Chinese battery maker Contemporary Amperex Technology Co. Ltd. Those batteries are less energy dense, which means they provide a shorter driving range, but are more readily accessible because they contain neither nickel nor cobalt.
“Right now there are constraints in the supply chain … particularly around certain minerals,” said Ford spokesman Marty Gunsberg. “Bringing on the second chemistry helps us break those constraints and that helps us bring more vehicles to market sooner.”
Ford also announced that it now has agreements with various mining companies, including one to source nickel from Vale SA’s Canadian unit, which operates in Ontario, Newfoundland and Labrador, and Manitoba. The company said it has sourced 70 per cent of the raw materials it needs for batteries to support annual production in excess of two million electric vehicles by 2026, citing agreements with BHP Group Ltd., Rio Tinto Ltd., and others.
Bringing in a second chemistry could be the difference between having access to an EV or not having access to an EV
Gunsberg said the decision to offer lithium-iron-phosphate batteries in some vehicles will allow Ford to meet its more immediate target of producing 600,000 electric vehicles by late 2023. Gunsberg declined to offer details on Ford’s expected production or expected consumer demand for either battery chemistry .
Lithium-iron-phosphate batteries may cost 10 to 15 per cent less than the alternative, but it is unlikely to translate into a significant discount of the retail price, Gunsberg said.
Ford said it has plans to localize 40 Gigawatt hours per year of lithium-iron-phosphate capacity in North America.
“Bringing in a second chemistry could be the difference between having access to an EV or not having access to an EV,” said Gunsberg, adding the cheaper battery may have less range, but is “highly durable” and “very tolerant of multiple charge” cycles.”
So far, most Western automakers have resisted lithium-iron-phosphate battery chemistry, in part because it offers lower driving range. But the batteries are prevalent in China, where Tesla Inc. has sourced them from Contemporary Amperex Technology, as Ford is now doing .
The situation underscores predictions by analysts that many metals needed for an energy transition will face supply gaps in the coming years that will cause price inflation and even constraints on new technology.
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Daniel Yergin, vice-president of S&P Global Inc., the research and data firm, published a report last week that suggested a looming supply gap for copper risks “short-circuiting” the energy transition.
Executives at mining companies have long been saying there could be critical supply gaps in nickel, cobalt and lithium.
Keith Phillips, chief executive of North Carolina-based Piedmont Lithium Inc., said he predicts the biggest shortage will be in lithium, which is needed for all battery chemistries.
Piedmont owns 25 per cent of Sayona Quebec, a subsidiary of Sayona Mining Ltd., which in June announced it would invest $80 million to restart a lithium mine in Quebec, and eventually hopes to open a refinery.
“The fastest thing to build is a car plant, next fastest is a battery plant, but the longest is the mine,” said Phillips. “Every car company is spending billions of dollars” to build its electric vehicle and battery supply chain, and “I believe that five years from now, there will be articles [because] they won’t be able to run the battery plants at full capacity,” Phillips said.
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