Ford Makes Major Commitment To CATL Lithium Iron Phospate EV Batteries

It’s no secret in the auto industry that in order to meet the commitments that manufacturers have for EV production this decade some significant changes are going to have to occur in the battery supply chain. One of those is much higher adoption of lithium iron phosphate (LFP) battery chemistry in addition to the nickel-rich chemistries being used for many EVs. In 2021, Ford indicated that it was considering using LFP, mostly for commercial applications. Today it announced a major supply deal with China’s CATL for LFP cell supply beginning in 2023.

LFP batteries have been very popular in China where cost and durability are great concerns to customers than absolute driving range. Iron and phosphorous are extremely abundant around the world and LFP cells cost at least 30% less than the nickel-manganese-cobalt (NMC), nickel-cobalt-aluminum (NCA) and nickel-manganese-cobalt-aluminum (NMCA) cells that are the preferred chemistry in many EVs today. LFP batteries have substantially better durability than nickel-rich chemistries and can withstand thousands of charge cycles with minimal degradation. CATL has claimed its LFP cells can last 1 million miles. However, they also have about 30% lower energy density nickel-rich cells.

The prices of nickel have more than doubled in the past year, in large part due to the war in Ukraine. Russia currently supplies about 10% of the world’s nickel and 20% of the nickel used in EV batteries. This has led to many automakers raising prices on EVs this year as battery prices have gone up for the first time in more than a decade.

While LFP has lower energy density than nickel-rich cells, that can be offset by moving to new structural cell-to-pack designs that allow more cells to be stuffed into the same volume by eliminating the module structure. TeslaTSLA
has already done this with the Model Y and Model 3 in China for two years and now with the standard range Model 3 in North America since late 2021. As Tesla has done, Ford will probably utilize the LFP batteries for standard range models will keeping NMC for the extended range packs.

CATL is the world’s largest supplier of EV batteries and provides the LFP cells used by Tesla and now Ford. Beginning in 2023, some portion of Mustang Mach-E will use LFP while F-150 Lightnings with iron phosphate will start rolling off the line in early 2024. This will be essential to Ford meeting its goal of a 600,000 annual EV production run rate by the end of 2023. This will include 270,000 Mach-Es produced in North America and China, 150,000 Transit EVs in North America and Europe, 150,000 F-150 Lightnings in North America and 30,000 mid-size SUVs produced in Europe. That European EV will be the product produced in Cologne, Germany using the Volkswagen MEB platform. Through 2024, that MEB-based model will undergo a major production ramp up as well.

It’s unknown at this time what percentage of those vehicles will use the CATL LFP batteries. Initial production will come from CATL plants in China, but by 2026, Ford intends to localize 40 GWh of LFP production in North America in addition to the 129 GWh of NMC coming from its joint venture with SK On.

The addition of CATL LFP batteries means that Ford has now sourced 100% of the battery supplies necessary for its 600,000 vehicle production plan by the end of 2023. It also has commitments for 70% of the batteries needed to reach its 2 million EV target by late 2026.

In order to help ensure that it’s suppliers LG, SK and CATL as well as the BlueOvalSK joint-venture have the raw materials needed to produce cells, Ford is also following what GM, VW, BMW and others are doing by investing directly to source raw materials. It has nickel supply deals with Vale Canada, PT Vale Indonesia, Huayou Cobalt and BHP. Ford also has lithium supply deals with Australia’s Liontown Resources and Rio Tinto. The Rio Tinto deal is part of a multi-metal arrangement that also includes copper and aluminum.

As the supply chain problems of the past two years have shown, relying on single sources of anything can be very problematic so Ford is also working on localizing supplies of cathode materials including lithium. EcoPro BM and SK have a letter of intent for cathode material production. Ford also has deals with ioneer and Compass Minerals for North American lithium supplies and Syrah Resources and SK for graphite from a plant in Louisiana. Ford also has a previously announced deal with Redwood Materials for battery recycling that should yield additional raw materials.