Ford Realizes Tesla's Battery Plan Is The Way To Go

Electric Vehicles / 3 Comments

Why buy batteries from someone else?

As the automotive world continues to inch closer and closer to full-scale electrification, numerous supplier and production issues need to be made. For example, mainstream automakers farm out many production tasks to suppliers, ranging in everything from brake pedals to transmissions. Electric vehicles, however, could work differently. For example, Tesla recently announced plans to begin developing its own battery cells. Panasonic is no longer its exclusive battery supplier even though the two have a joint venture agreement with the Gigafactory in Nevada. General Motors is also investing billions to develop its battery cell manufacturing plants.

And now, according to Reuters, Ford wants to do the same. "We are discussing (battery) cell manufacturing," said Ford CEO Jim Farley. "I think that's natural as (EV) volume grows."

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This is in contrast to what Farley's predecessor, Jim Hackett, said only last July, believing there was "no advantage" for Ford to makes its own battery cells. If Farley does decide to proceed with this plan, it'll cost Ford billions of dollars, but the long-term payoff is likely to be substantial.

Demand for EVs is relatively low at present, but analysts predict this will dramatically begin to change in only a few years' time, perhaps as soon as 2025. GM and Hyundai have both gone on record stating they intend to be building and selling one million EVs a year by that time. Ford has not provided a similar goal, but the launch of the Ford Mustang Mach-E and E-Transit are only the beginning.

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All-electric vehicles, compared to their combustion-engine counterparts, are actually less complicated to build because they require fewer parts. Combustion engines, compared to electric motors and battery packs, require more hands-on attention. By having battery cell production in-house, automakers will be better positioned to avoid general production problems that could cause delays. The combination of simpler manufacturing and the elimination of third-party suppliers would also help lower overall costs.

For the moment, Ford has not made a final decision, but if both GM and Tesla are pursuing in-house battery cell production, then it'd probably make good business sense to follow suit.

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Source Credits: Reuters

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