Ford CEO Calls for U.S. Battery Production to Avoid Shortage
“We need to bring large-scale battery production to the U.S., and we’ll be talking to the government about” that, Jim Farley, Ford’s chief executive officer, said Wednesday at the Wolfe Research Auto Conference. “We can’t go through what we’re doing with chips right now with Taiwan. It’s just too important.”
Ford shares surged as much as 6.7%, reaching a three-year high. They finished the New York trading session up 5.6% to $12.27.
A global shortage of critically needed computer chips is causing a wave of factory idlings worldwide that could cut automotive earnings before interest and taxes by one-third at Ford and General Motors Co. this year, Moody’s Investor Service estimates. Many of the world’s chips used in cars and consumer electronics come from the Taiwan Semiconductor Manufacturing Co., which has struggled to meet unexpectedly strong demand from both sectors.
Ford’s battery supplier for its upcoming electric F-150 pickup, SK Innovation Co. of South Korea, recently lost an intellectual-property case brought by rival LG Chem Ltd., also from South Korea. The International Trade Commission banned SK Innovation from importing batteries to the U.S. for 10 years, but allowed the company to import components for the next four years for the batteries that will power the plug-in F-150 coming in 2022.
Farley has called on both companies to negotiate a settlement. But he also believes the U.S. needs to in-source battery production to resolve supply and labor issues that could disrupt the industry’s broad rollout of electric vehicles over the next decade. Ford has said it will spend $22 billion on EVs through 2025.
“This is a huge, multi-solution opportunity,” Farley said. “For legacy players, we have to deal with our labor issues, so more in-sourcing is more important to us.”
Farley also said the company is “relentlessly and ruthlessly rooting out inefficiencies” in its auto operations. He said Ford could reduce expenses from warranty-related repairs to its vehicles by between $1 billion and $2 billion annually.
“We are not competitive yet on cost,” Farley said. “Warranty is a major opportunity.”
Farley, who rose to CEO on Oct. 1, sees a growth opportunity in selling services to drivers and providing data from the company’s cars, which are now connected to the internet. He said that already is a $4 billion market.
“It could be bigger,” he said. “And right now we’re just getting started.”
©2021 Bloomberg L.P.