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Apparently Ford will pass on building a battery factory....

MichaelP90DL

Active Member
Apr 19, 2019
1,588
1,603
Lancaster, CA
From Teslarati, by Joey Klender:

Tesla’s battery strategy will not be adopted by legacy automotive company Ford, because Jim Hackett, the company’s CEO, says there is “no advantage” in migrating capital into owning a cell manufacturing facility.

During Ford’s Q2 2020 Earnings Call in late July, Morgan Stanley’s Adam Jonas asked about the company’s strategy to produce EV batteries in-house, as opposed to sourcing the cells from third-party companies like Panasonic and LG Chem.

Hackett, who elected to retire from his post as head of Ford earlier this year, stated that his team did a “deep dive” on whether it was advantageous to create its own battery cells.

It proved not to be advantageous for Ford.

“I’ve met with a number of the people that you know that are in the supply side of this. And it was our estimation, in fact, our whole team went through a really deep dive on this six months ago, that the supply chain has ramped up since Elon built his Gigafactory,” Hackett said. “And so there’s plenty there that does not warrant us to migrate our capital into owning our own factory. There’s no advantage in the ownership in terms of cost or sourcing as what Ford can draw on.”

Instead, the company will continue to go the path that it is now, which requires sourcing batteries from third-party suppliers instead of researching and improving on cells within the company’s facilities across the world.

Interestingly enough, Tesla has found tremendous advantages in producing its own batteries at its Giga Nevada facility, which is responsible for assembling battery packs with the help of Panasonic.

Forbes stated that a Trefis analysis from January 2020 showed that battery costs fell by 45% from 2016 to 2019, which effectively decreased the price of Tesla’s vehicles by $7,000 on average.

Despite this, Ford isn’t budging, and the company’s executives don’t believe they require a battery plant at the current time.

Hau Thai-Tang, Ford’s Head of Product Development and Purchasing, stated that the company would need to manufacture between 100,000 and 150,000 electric vehicles a year to justify a battery production facility, Automotive News reported.

“We don’t have that volume initially to justify that capital expenditure,” Thai-Tang said. “There’s insufficient scale for any one OEM, other than somebody who’s a full-line battery-electric manufacturer like Tesla, to justify that spending.”

Thai-Tang’s statement indicates that there is a possibility that Ford could change its mind about battery production in the future. Still, the company will have to increase the production of its electrified lineup. For now, he is okay with buying batteries from suppliers.

“It gives us the ability to access the latest technology and innovation across multiple suppliers,” he said.

Tesla, however, is thriving by developing its battery technology. Many Wall Street analysts contribute the company’s cell strategy as a primary reason for its success, which has been exponential so far this year for investors.

Ford is still fine-tuning its EV project and is planning to release a fleet of forty electric cars by 2023 by spending $11 billion by 2022 to develop the technology required to be competitive in the quickly-growing sector.

(Looks like Ford doesn't expect to sell many EVs).
 
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Cosmacelf

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Mar 6, 2013
8,745
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(Looks like Ford doesn't expect to sell many EVs).

Exactly. They did a "deep dive" and still came up clueless. Ford might be right in that if you sell less than 150K EVs a year, you probably don't need to make your own batteries or cells. But then they said Tesla is different because their whole product line is electrified. Bzzzzt! Wrong answer!

Tesla sold way more than 150K EVs in a SINGLE model last year. Ford could do the same. They just choose not to make something compelling enough for people to buy in large quantities.
 

Feathermerchan

Active Member
Sep 21, 2018
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Euless, Tx
Thai-Tang said. “There’s insufficient scale for any one OEM, other than somebody who’s a full-line battery-electric manufacturer like Tesla, to justify that spending.”

So Ford is not planning to be a full line battery-electric manufacturer.
 
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MichaelP90DL

Active Member
Apr 19, 2019
1,588
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Lancaster, CA
Exactly. They did a "deep dive" and still came up clueless. Ford might be right in that if you sell less than 150K EVs a year, you probably don't need to make your own batteries or cells. But then they said Tesla is different because their whole product line is electrified. Bzzzzt! Wrong answer!

Tesla sold way more than 150K EVs in a SINGLE model last year. Ford could do the same. They just choose not to make something compelling enough for people to buy in large quantities.
Yep. Either jump in with both feet or stay out of the pool. I wonder if Mr. Hackett had the resolve to jump into marriage with both feet.
 

BlindPass

Member
Jul 23, 2020
536
370
Florida
Thai-Tang said. “There’s insufficient scale for any one OEM, other than somebody who’s a full-line battery-electric manufacturer like Tesla, to justify that spending.”

So Ford is not planning to be a full line battery-electric manufacturer.
Not until they don’t have decades of costs tied up in ICE. Buyers trickling to EVs isn’t going to motivate them to change.
 
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Feathermerchan

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Sep 21, 2018
1,192
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Euless, Tx
Well you know Tesla is doing pretty well as a company. And with the factories they are building, that trickle will soon be a flood. Tesla is already ahead of the rest. They will just get further ahead. Not motivated by profits but by doing what needs to be done.
 

MichaelP90DL

Active Member
Apr 19, 2019
1,588
1,603
Lancaster, CA
Well you know Tesla is doing pretty well as a company. And with the factories they are building, that trickle will soon be a flood. Tesla is already ahead of the rest. They will just get further ahead. Not motivated by profits but by doing what needs to be done.
Ford is making an enormous strategic mistake, which could be suicidal. Oh well. :)
 

tcoombes

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Supporting Member
Jan 22, 2018
1,068
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Northern California
It’s too late for Ford to do vertical integration into EV batteries because it takes too long, costs too much, and the tech advance already favors Tesla. Best for Ford to try and lock a deal with an existing battery manufacturer and cut the best deal they can for exclusivity if possible. It probably won’t be possible, but if they do work a deal then the higher prices for batteries through a third party won’t be able to compete with Tesla’s vertical battery factory prices. Ford won't be able to compete on price, so what will they be able to compete on? Tech? Efficiency? Looks? Features? Safety? It should be clear that this last ditch strategy just won’t be enough for Ford to survive long term.
 

BlindPass

Member
Jul 23, 2020
536
370
Florida
1.)Well you know Tesla is doing pretty well as a company.
2.)And with the factories they are building, that trickle will soon be a flood. Tesla is already ahead of the rest. They will just get further ahead.
3.)Not motivated by profits but by doing what needs to be done.
1.) We’re not talking about Tesla’s market cap. It’s telling that’s your response. We’re talking about the costs Ford would need to incur to become a vertically integrated EV company. Unlike a startup, Ford’s needed to show profits (or as little loss as possible) for the past decade. Investing in EVs would have made sense imo, but they also have incentive to not have EV lower near term revenue streams of products (ICE) with fixed costs. It’s a balancing act. Some legacies will do that well, others won’t. Besides the market dynamics slowing ICE companies from being first to adopt EVs, Verticality is foreign to that industry. Perhaps they view out-sourcing as their best bet. Audi has done that and made an EV good enough to have me not want a MY.

2.) Soon be a flood? I don’t think you’re aware of global auto sales. Tesla will need 10 more of those to just reach the scale of the major players. Of course Tesla is way ahead, and likely will expand that lead in the next decade. However, even if Tesla uses that to sell as many as Toyota in 5-10 years, there’s still a lot of room for most legacies to transition. We’ll be battery constrained (“need more nickel”) even if a majority of consumers wanted EV next year.

3.) Tesla is motivated by profits, don’t be a rube. As a startup they are able to play by a different set of rules in that they don’t need to as badly show a quarterly profit, but they’re basically as profit driven as any, if not more: cost-cutting and cheapness in their products, negligence to QA in their rush to hit production numbers, “clarifying” warranties to save costs, obstructing secondary market service, bringing freemiums to the auto industry, resorting to uncompetitive DMCA to maximize digital revenue, and so on.
 
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Feathermerchan

Active Member
Sep 21, 2018
1,192
934
Euless, Tx
I think the only thing the majors make themselves in the body stampings and engines. The Ford 100 speed is a joint venture with GM. Not new. Chrysler and GM went in on the NV2500 manual transmission. Chrysler builds the 8spd but ZF designed it and made the first ones for them.
BTW ZF is discontinuing development for ICE driveling components so they can concentrate on electric.
Crisis speeds transition to electromobility, says ZF

Maybe the scenario for these 'assemblers' is that ICE product supply will dry up because their suppliers have moved on and they will be forced to assemble EVs.

BTW if you read Tesla's mission statement it does not concern itself with maximizing profits. That's gotta be refreshing.

"Tesla's mission is to accelerate the world's transition to sustainable energy. Tesla was founded in 2003 by a group of engineers who wanted to prove that people didn't need to compromise to drive electric – that electric vehicles can be better, quicker and more fun to drive than gasoline cars."
 

Rockster

Active Member
Oct 22, 2013
3,012
4,621
McKinney, TX
Ford spends about $8 billion a year in R&D. That means they’ve had more than a decade and $100B in R&D to spend since Tesla released the Roadster and announced their sustainable energy plan to the world. Just how much innovation has Ford brought the world in that time?
 
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Fred42

Active Member
Dec 24, 2018
1,052
2,982
Pennsylvania
From Teslarati, by Joey Klender:

Tesla’s battery strategy will not be adopted by legacy automotive company Ford, because Jim Hackett, the company’s CEO, says there is “no advantage” in migrating capital into owning a cell manufacturing facility.

During Ford’s Q2 2020 Earnings Call in late July, Morgan Stanley’s Adam Jonas asked about the company’s strategy to produce EV batteries in-house, as opposed to sourcing the cells from third-party companies like Panasonic and LG Chem.

Hackett, who elected to retire from his post as head of Ford earlier this year, stated that his team did a “deep dive” on whether it was advantageous to create its own battery cells.

It proved not to be advantageous for Ford.

“I’ve met with a number of the people that you know that are in the supply side of this. And it was our estimation, in fact, our whole team went through a really deep dive on this six months ago, that the supply chain has ramped up since Elon built his Gigafactory,” Hackett said. “And so there’s plenty there that does not warrant us to migrate our capital into owning our own factory. There’s no advantage in the ownership in terms of cost or sourcing as what Ford can draw on.”

Instead, the company will continue to go the path that it is now, which requires sourcing batteries from third-party suppliers instead of researching and improving on cells within the company’s facilities across the world.

Interestingly enough, Tesla has found tremendous advantages in producing its own batteries at its Giga Nevada facility, which is responsible for assembling battery packs with the help of Panasonic.

Forbes stated that a Trefis analysis from January 2020 showed that battery costs fell by 45% from 2016 to 2019, which effectively decreased the price of Tesla’s vehicles by $7,000 on average.

Despite this, Ford isn’t budging, and the company’s executives don’t believe they require a battery plant at the current time.

Hau Thai-Tang, Ford’s Head of Product Development and Purchasing, stated that the company would need to manufacture between 100,000 and 150,000 electric vehicles a year to justify a battery production facility, Automotive News reported.

“We don’t have that volume initially to justify that capital expenditure,” Thai-Tang said. “There’s insufficient scale for any one OEM, other than somebody who’s a full-line battery-electric manufacturer like Tesla, to justify that spending.”

Thai-Tang’s statement indicates that there is a possibility that Ford could change its mind about battery production in the future. Still, the company will have to increase the production of its electrified lineup. For now, he is okay with buying batteries from suppliers.

“It gives us the ability to access the latest technology and innovation across multiple suppliers,” he said.

Tesla, however, is thriving by developing its battery technology. Many Wall Street analysts contribute the company’s cell strategy as a primary reason for its success, which has been exponential so far this year for investors.

Ford is still fine-tuning its EV project and is planning to release a fleet of forty electric cars by 2023 by spending $11 billion by 2022 to develop the technology required to be competitive in the quickly-growing sector.

(Looks like Ford doesn't expect to sell many EVs).
Ford doesn't have the technical expertise or the money to develop its own cost effective cell production. This decision helps maximize their profits and cash flow in the next few years but also helps to make it clear that their destiny is bankruptcy court.
 
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uujjj2

Member
Aug 11, 2020
491
1,933
San Jose, CA
Those quotes from Hau Thai-Tang and Jim Hackett don't sound convincing at all. 100-150k units to justify a battery plant is not much volume. And capital is so cheap that "saving capital" is an empty reason. Honestly, it sounds like Ford has already decided to build a battery plant but just doesn't want to announce it yet.
 

BlindPass

Member
Jul 23, 2020
536
370
Florida
I don't know. The big 3 seem bent on contracting things out. GM is going to have it's Badger (insert joke here) built be someone else.
It’s possible that’s all they can do contractually.

The politics (and corruption) of manufacturing handcuffed the Big 3 when making ICE cars, is it no wonder they are at a disadvantage making EVs? Not all of that is inherently bad, but it results in constraints.

There are many workers and voters that benefit from obstructing change.
 

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