Ford Motor said on Thursday that it had reached an agreement to acquire battery packs from a Chinese supplier as it races to ramp up its global production of electric vehicles.
The automaker said it would begin purchasing battery packs next year from Contemporary Amperex Technology Company Limited that will be used in electric vehicles produced in North America and other regions. The Chinese company, which is known as CATL, is the largest battery producer in the world and is often regarded as the most important player in the electric vehicle industry after Tesla.
The automaker also said it would buy battery packs from LG Energy Solution and increase purchases of packs from an existing partner, SK On, which has built a plant in Georgia and is working with Ford to build three others in the United States.
The agreements are all part of a push by Ford to be able to produce 600,000 electric vehicles a year by the end of 2023, which would be a steep increase from its current output level.
The company’s two top-selling models are the Mustang Mach E, an electric sport-utility vehicle, and the F-150 Lightning, an electric version of its popular full-size pickup truck. In the first half of this year, Ford sold 17,675 Mach Es in the United States, and it sold 2,296 Lightnings between April, when production started, and the end of June.
Ford has said it wants to produce 270,000 Mach Es a year for North America, Europe and China by 2024, as well as 150,000 Lightnings in North America and 150,000 electric Transit vans for North America and Europe. It also aims to add a new electric SUV in Europe and hopes to be able to make 30,000 a year by the end of 2024.
The company is adding battery suppliers in response to strong demand for its electric models, Ford’s chief executive, Jim Farley, said in a statement. “Now we are putting the industrial system in place to scale quickly,” he said.
In addition to adding battery suppliers, Ford is also diversifying the types of batteries it is using. CATL will supply battery packs that use lithium iron phosphate, or LFP, battery cells that Ford will use to produce Mustang Mach Es in North America starting next year, and for F-150 Lightnings in 2024.
Ford said it had signed a memorandum of understanding with CATL to discuss further cooperation for batteries for Ford’s operations in China, Europe and North America. It added that it planned to add a North American source of LFP cells by 2026, but provided no further details.
Ford said it expected the LFP cells to reduce battery material costs by 10 to 15 percent over the nickel cobalt manganese, or NCM, battery cells it currently uses.
The company said LG Energy Solution was increasing production of NCM batteries cells at a plant in Poland to provide batteries for the Mustang Mach E and E-Transit van.
SK On is working to increase output of NCM cells at its Georgia plant for the F-150 Lightning, Ford said. SK On and Ford previously announced plans to build two battery plants in Kentucky and a third in Tennessee.