|A concept of the BlueOvalSK Battery Park predicted for $ 5.8 billion by Ford Motor Co. in Kentucky is shown above. When completed, the company’s three new battery plants could add an annual battery cell manufacturing capacity of 129 GWh in the United States.
Source: Ford Motor Co.
U.S. automaker Ford Motor Co. rocked the battery markets when it announced plans to spend $ 11.4 billion on battery and electric vehicle manufacturing, but left unanswered questions about it. where he would find critical metal supplies.
A range of battery metals including lithium, nickel and cobalt, which are largely mined and refined outside the United States, face growing supply shortages and volatile prices, among other constraints of the supply chain. This will create problems for Ford, which hopes to meet the growing demand for electric vehicles.
“Ford is in the same boat as everyone else,” said Caspar Rawles, head of pricing and data at Benchmark Mineral Intelligence, in an interview. “They’re all going to be fighting over materials, which are expected to be in deficit or are already in deficit. You’re going to see an increase in demand, and we haven’t had a corresponding increase in new supply.”
Ford’s plan, announced on September 27, to build a trio of lithium-ion battery plants in Kentucky and Tennessee aims to roughly double U.S. battery production capacity in 2020 by adding 129 GWh of manufacturing per year, with production starting at factories in 2025. The project, built in collaboration with South Korean battery maker SK Innovation Co. Ltd., could propel the country into the ranks of global battery capacity at a time when US contributions to the supply chain are pale compared to their counterparts like China. In 2020, lithium-ion battery cell capacity in North America was only 7.6% of global capacity, according to data from Benchmark Mineral Intelligence. By comparison, 75.3% of the battery cell capacity was in China.
“It’s a big deal,” Rawles said. “The United States and Canada have historically fallen behind in boosting the capacity of lithium-ion batteries. “
But metals extracted upstream are rare. S&P Global Market Intelligence forecasts show that the global supply of primary nickel will be in deficit in 2021, at 128,000 tonnes. Although the outlook for refined cobalt has improved in recent months, the world could still experience a deficit of 1,800 tonnes this year, and supplies will be tight until 2025, according to Market Intelligence estimates. And although sheltered from a deficit in 2021, lithium will likely hit a shortage estimated at 30,000 tonnes of lithium carbonate equivalent by 2025.
“I think the shortage of raw materials is the biggest risk to the adoption of electricity in the market today,” said Seth Goldstein, senior equity analyst specializing in lithium and electric vehicles at Morningstar Research. Services. “One of the potential hurdles faced by automakers is the lack of raw materials, especially the battery materials they need if we are to meet the automakers’ plans of 40-50% of their production being electric vehicles to drums.”
Ford aims to create a 3,600 acres “Vertically integrated ecosystem” at its proposed Tennessee-based campus, dubbed Blue Oval City, to support the expansion of its electric vehicle lineup. But full vertical integration would require the metals and minerals from the battery to be mined nearby, and the United States supplies a tiny fraction of the world’s lithium, the most difficult battery ingredient to replace with new technology. In 2020, the United States produced 2,985 tonnes of lithium carbonate equivalent, or about 0.72% of the world’s raw material supply, according to Market Intelligence data.
The rhetoric of the Biden administration has focused since its inauguration on stimulating the entire national supply chain for batteries. US President Joe Biden issued a supply chain executive order in February, and the US Department of Energy outlined policy to promote battery supply chains in an announcement in June.
“Strengthening our national supply chain will accelerate our efforts to decarbonise the economy – helping power electric vehicles and increasing storage and grid resiliency,” said US Secretary of Energy Jennifer Granholm in a press release at the time.
Ford has not returned a request for comment on how it intends to maintain a stable source of raw materials to meet its manufacturing strategy. But speaking at the Detroit Homecoming VIII event on September 25, Ford CEO Jim Farley called attention to the lack of home battery material options, Detroit News reported.
“We have to bring battery production here, but the supply chain has to go to the mines,” Farley said. “This is where the real cost is, and people in the United States don’t want mining in their neighborhoods. So, are we going to import lithium and extract cobalt from nation states that have the jobs of them. kids and all kinds of corruption, or are we gonna get serious about mining? “
Ian Lange, an economist at the Colorado School of Mines who has served as an economist for both President Biden and former President Donald Trump, called Farley’s statement “a step in the right direction for national mining.” .
“It’s one thing for mining companies to say, ‘guys, you’re going to need us’, only for these downstream companies, especially the ones whose [Biden] the administration courted, [to say it]”said Lange.” It’s harder to ignore Ford. “
The automaker seems to be hoping that recycling can provide some of what it needs. In their Sept. 27 statement, the automaker also touted its partnership with Nevada-based battery recycling company Redwood Materials Inc., the project would take time to ramp up.
“[W]We need to plan well in advance for the increased demand for materials that this transition will create, ”Redwood Materials said in a statement. “We also need to carefully manage the supply chain risks around lithium-ion batteries or risk a recurrence of semiconductor production shortages. causing chaos in the world today. “