Ford Reveals Plans for EV, Battery Factories in United States

In recent years, Ford (NYSE: F) has been clear that it sees EVs as being the future of the company. Currently, the company believes that by the end of the decade, 40 to 50% of vehicles sold will be EVs which would translate to around 40 million EVs sold per year. Of course, this has major implications as a completely new supply chain would have to be built for these vehicles.

In EVs, the battery can be the most expensive component and difficult to produce. Based on current technology, it also requires various metals that have to be sourced like nickel and lithium. We are experiencing the ramifications of a supply chain issue with the shortage in semiconductors which is resulting in many auto companies unable to produce at full capacity.

Given this issue, the news wasn't totally surprising that Ford and South Korean battery manufacturer SK Innovation are investing $11 billion to build several new factories in Tennessee and Kentucky to develop EVs and batteries. These would be the first new Ford factories built in over 50 years. The Tennessee facilities will be a production facility for Ford's F-series pickup trucks and a battery assembly division, while the factories in Kentucky will manufacture batteries.

Construction won't be completed until 2025. However, it's another indication that Ford is committed to being a major player in the EV space despite it currently being a small portion of total sales. The transition to EVs could be expedited by the infrastructure bill which would fund the construction of hundreds of thousands of new charging stations, as well as new consumer incentives for EV sales.

It's also a new strategy for Ford which is looking to reduce reliance on suppliers by producing batteries in-house. The company estimates that the company's new battery plants would produce 129 gigawatt-hours of production capacity. The company's newest EVs - the F150 and electric Mustang - have received rave reviews and sold out in presales.

The company also estimates that it will create 11,000 new jobs at these factories. In addition to this, it plans to spend $525 million on a nationwide job training program. The intention is to train the next generation of workers on the intricacies of EV manufacturing and maintenance for factories, dealerships, and repairs. Of course, this could also be viewed as Ford investing in its after-market supply chain to keep vehicles operational.