Ford to charge up EV drive with flurry of battery deals By Reuters

By Joseph White

DEARBORN, Michigan (Reuters) -Ford Motor Co on Monday unveiled new supply deals for battery-grade lithium, as the U.S. automaker aimed to meet its target of producing 2 million electric vehicles by 2026 and close the gap on market leader Tesla (NASDAQ:) Inc.

Ford is holding an investor event Monday explaining how it plans to make money and ramp up production of its next-generation electric vehicles as it works to address a current significant cost disadvantage against competitors.

North American automakers are racing to secure supplies of battery materials to boost EV output as demand surges for environment-friendly vehicles and to take advantage of tax credits offered by the U.S.

Albemarle (NYSE:) Corp and Nemaska Lithium will supply lithium hydroxide, a primary ingredient in the cathode of lithium-ion batteries, over a period of five and 11 years, respectively.

Albemarle will supply more than 100,000 metric tons of lithium hydroxide for approximately 3 million future Ford EV batteries, the companies said Monday.

Albemarle shares rose 1% in premarket trading to $206.01.

Ford vice president Lisa Drake said the deal “helps us fortify and de-risk our plans for sourcing the key minerals we need to make EVs more accessible for our customers longer-term.”

Lithium, a key component in most modern EV batteries, has a higher energy density, making it possible to keep batteries compact and have higher storage capacities, crucial to enable covering long distances between charging.

Privately held EnergySource Minerals will supply lithium hydroxide from the Imperial Valley, California site, which is expected to be operational in 2025, it said, while Compass Minerals will provide lithium carbonate.

Ford had earlier this year joined PT Vale Indonesia and China’s Zhejiang Huayou Cobalt as their new partner in a $4.5 billion nickel processing plant in Indonesia.

The deals announced on Monday also come as doubts linger on Wall Street about legacy automakers’ ability to hit the lofty targets set for EV production.

Ford has said it would have a global capacity to build 600,000 EVs by the end of 2023. Meanwhile, rival General Motors Co (NYSE:)’s EV production at mid-decade could be capped as well, according to a forecast and analysis prepared for Reuters.

The U.S. automaker on Monday reaffirmed its full-year forecast of $9 billion to $11 billion of adjusted earnings before interest and taxes and about $6 billion in adjusted free cash flow.

Ford continues to expect its electric vehicle unit to lose $3 billion this year.

Nemaska Lithium is equally owned by Investissement Québec, the economic development agency of the Québec government, and Livent (NYSE:). 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, though neither company specified the number of years.