This commitment — the single biggest investment in the history of the 118-year-old automaker — will pay for a new assembly plant to build all-electric F-Series trucks and three battery plants. It establishes Ford as a contender in a transportation battle that's evolving in real time as automakers pivot from the internal combustion engine to battery-operated vehicles.
Ford had already announced an investment over the past two years of $950 million in the Rouge Complex in Dearborn, Mich., to build the all-electric 2022 F-150 Lightning.
Bringing the battery supply chain to the U.S. insulates Ford from being held hostage by battery shortages the way the industry has been kneecapped by the global semiconductor chip shortage.
Two battery plants will be built in Glendale, Ken. A battery plant and the truck assembly plant will be built in Stanton, Tenn. It all pencils out to 5,000 jobs in Kentucky and 5,800 jobs in Tennessee.
This also establishes a clear path to zero-emission vehicles for Ford in North America.
EYES ON CHINA
The investment includes $7 billion from Ford and about $4.4 billion from its joint venture with battery partner SK Innovation of South Korea, Ford said.
Where batteries are made, and where they're shipped, will be key to automakers' strength in coming years. China is positioned to be a superpower. Companies in the U.S. want a secure, local supply chain. General Motors has also taken steps in this direction, as have other competitors in the industry.
"This is a really important strategic bet to in-source these key components. It won't be the last," Ford CEO Jim Farley said during an interview Monday.
Farley has been making a come-from-behind push on electrification since stepping into the top job at the company on Oct. 1.
SOLD OUT ALREADY
Now he feels the company is positioned to truly compete in the all-electric arena.
"Are we ahead or behind? This announcement puts us ahead. We already have sold out of our first generation of electric vehicles and we're dealing with that capacity issue now," Farley told the Free Press.
These new plants will produce perhaps twice as much per year as all the batteries made in the U.S. for automotive use at 129 gigawatts, Farley said.
"It's a million units of batteries — annual," he said. "It's a million vehicles' worth of batteries we're announcing this week."
With projects in Tennessee and Kentucky, combined with existing SK Innovation supplies made at a plant in Georgia, Ford now will be able to obtain the 140 gigawatts of battery capacity it has talked about having in five years, Farley said. "So, it's happening at Ford. Our vehicles are sold out. And three to four years from now, with all this capacity, we'll have more than a million units of batteries on our hands ... This puts us on the map as a leader."
INCLUDES RECYCLING
These are not all the batteries that Ford will need for all electric vehicles in North America, but it's a start, he said.
The company released this punch list:
- Ford is planning to build a 3,600-acre mega campus in west Tennessee called Blue Oval City, designed to be the largest, most efficient factory in Ford history. It will include an assembly plant, battery production and supplier park. Inside the plant, "zero-waste-to-landfill" processes will capture materials and production scrap at an on-site materials collection center to sort and route materials for recycling or processing either at the plant or off site.
- The assembly plant at Blue Oval City is designed to achieve a vision of carbon neutrality and meet the company's air emission goals to have a regenerative impact on the local environment through "biomimicry in design of the plant facility."
- In central Kentucky, Ford will build BlueOvalSK Battery Park, consisting of twin battery plants that will power a new lineup of Ford and Lincoln vehicles coming to market later this decade. Production of advanced lithium-ion batteries will begin in 2025.
Ford will begin groundbreaking later this year, Lisa Drake, Ford chief operating officer for North America, said in an interview with the Detroit Free Press.
Production is targeted to begin in 2025 at both sites in Tennessee and one site in Kentucky, with the second battery cell facility in Kentucky launching in 2026.
Recycling will be part of the whole operation too, she said.
"This will be the initial capacity that we install as we march towards our 40% EV penetration in 2030," Drake said.
The 3,600-acre site in west Tennessee is three times the size of the Rouge, she noted. And there's room to expand.
"One battery cell plant consumes the energy five times that of Kentucky Truck" in Louisville, she said. "Requirements to build these types of properties are pretty substantial."
They couldn't be near earthquake or hurricane zones. They needed to be near highways and railways. Being close to aquifers creates potential to heat and cool portions of the operation efficiently, Drake said.
In addition, officials in Tennessee have set up a fund to pay for vocational training and develop curricula that teach the skills needed in the workforce, she said.
Tennessee officials said Ford's return to the state is special because of its history.
"Back in 1913, Ford produced wooden wheels and body foundations for Model T Fords in Memphis," said Beverly Robertson, CEO of the Greater Memphis Chamber, in a statement. "They're returning to transform the Memphis market and make eco-friendly, carbon-neutral manufacturing the gold standard of the automotive industry."
Ford opened a Model T assembly plant in Memphis, relocated to a new facility in South Memphis in 1924, and then relocated to Ohio in 1958.
Ted Townsend, chief economic development officer of the Greater Memphis Chamber, said the Ford project is "deeply personal" to him.
"Back in 1958, Ford relocated its South Memphis plant to Ohio and my grandfather was unable to relocate," he said. "Now, 63 years later, I get to be on the team that brought Ford back. It makes this win that much sweeter."
FROM MODEL T TO ALL-ELECTRIC
With two Ford plants in Louisville, Kentucky Gov. Andy Beshear knows Ford well and worked to close this deal. He told the Free Press on Monday that the project involves a $250 million forgivable loan, which requires the automaker to meet its projections for investment and jobs.
"This is a variation of our normal incentive package," Beshear said. "They'll be able to draw on this loan over a period of about 20 years. It'll include conveyance of the land, that is the mega site. It's 1,500 acres off I-65, just about 40 minutes south of Louisville. And the last piece is about $36 million in training."
The state's 100-year relationship with Ford has included everything from Model T production to building U.S. Army vehicles for World War II, the governor said.
"The most important piece of an automobile moving forward is going to be that battery," Beshear said. "We will never be a flyover state again. Kentucky is going to be talked about in every boardroom in America. It is a landmark moment ... We're humbled that Ford chose us. This isn't just transformational for Kentucky, it's transformational for Ford. These investments are bets they're making on the future. They're entrusting us with their future. it is an incredible vote of confidence. We're not going to let them down."
Beshear said his granddaddy worked in his late teens and early 20s at a Ford plant in Michigan before becoming a Baptist minister. These days, family loyalty continues.
"I'm a proud driver of Ford vehicles," Beshear said. "In fact, when I ran for attorney general, which was my first elected job, I drove my hybrid Escape around the state putting 200,000 miles on it. It has never let me down."
All of this investment is meant to support global operations.
In addition to recent investments in Michigan from Ford, the company said in recent days it will work with Redwood Materials on a "closed loop domestic supply chain," increasing the production of the upcoming F-150 Lightning truck to 80,000 trucks annually in Dearborn.
TEXAS, MICHIGAN GET TRAINING MONEY
Ford is also investing $90 million in Texas alone and $525 million nationally over the next five years on auto technician training as vehicle technology continues to improve.
While the new truck assembly plant will be a Ford facility, the three battery plants will be joint ventures with SK Innovation and subject to organizing by the UAW. Employees will have the ability to choose whether to unionize and Ford officials said they support their right to that choice.
"We commend Ford for investing in the U.S., resulting in the creation of thousands of good middle-class jobs. The UAW is eager to work with Ford to continue to assure the culture of manufacturing high quality vehicles and components for their customers," said UAW Vice President Chuck Browning, head of the union's Ford department, in a statement.
Volkswagen has a strong presence in Chattanooga, Tenn., where it has all-electric cars and batteries in pilot production now. The German company has invested more than $800 million in plant expansion.
TESLA ON THE HORIZON
Ford has been watching its U.S. competitor Tesla carefully, acknowledging its leadership in the all-electric manufacturing space — and realizing Ford must do all it can to step up its game now.
"There is a very healthy sense of urgency in the company. The tension and the sense of urgency is from a competitive environment. It's kind of undeniable," Farley told the Free Press. "Tesla made a billion dollars, a billion dollars in the second quarter ... They were very profitable in the vehicle business. And, as well, the battery-electric business in Europe is like 12% of the market. It's going really fast."
'TOTALLY CLEAN SHEET'
Longtime industry observer John McElroy, host of "Autoline After Hours" podcast and webcast, said, "Ford is going all-in on electrics. Instead of taking existing models and modifying them to be electric, it's going total clean sheet."
Efficiency created by these huge investments will pay off immediately, he said.
"This is absolutely Farley doing it. He's leading the charge," McElroy said. "As recently as two years ago, there was a lot of skepticism on whether electric vehicles would ever catch on. Fast forward to today, and it's obviously come on very strong. This is a decision General Motors made several years ago. It's catchup for Ford, but still early days. They're not way behind."
FLYING WITHOUT A NET
And while President Joe Biden and members of Congress have been highly engaged in developing an infrastructure plan, this business investment is not dependent on federal policy in Washington, Drake said.
"I would say that collaboration certainly helps," she said during a media briefing. "It makes this acceleration much easier. Our plan is not built on one administration's policies or another. Our plan is our vision and our plan. But certainly we would like to see help on consumer adoption. It's always helpful to have incentive packages. But, again, this is our vision and our strategy and we're not reliant on anything coming out of Washington to deliver it."
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