Ford Strikes Lithium Supply Deals With World’s Top Producers

In a recent display of its commitment to fortify the supply chain necessary for a significant expansion in electric-vehicle (EV) production, Ford Motor Co. has unveiled a series of new battery-material sourcing agreements. These agreements demonstrate Ford’s strategic approach to ensure a reliable supply chain and position itself at the forefront of the evolving EV market.

Among the notable companies that inked deals with Ford on May 22 is Albemarle Corp. from the United States and SQM from Chile, both renowned as the world’s largest lithium producers. These agreements, part of the five partnerships disclosed on Ford’s investor day, shed light on the automaker’s vision to manufacture two million EVs annually by 2026 and continue scaling up production.

For years, automakers have grappled with the availability and cost of crucial battery materials, such as lithium, nickel, and cobalt, as they endeavor to expand their electric lineups. The urgency surrounding these concerns has intensified in recent months due to escalating competition to secure supply pacts, volatile raw material costs, and the Biden administration’s call for companies to reduce their dependence on China for critical minerals.

During a Bloomberg Television interview, Ford CEO Jim Farley emphasized that the challenge lies not in mining these materials but in processing them effectively. Farley stated, “The mining part is not the constraint. It’s the processing. So turning those raw materials, especially lithium and nickel, into processed materials we can put into a slurry to make the cells themselves.”

This marks the second time within a year that Ford has announced direct agreements with battery metals producers, following a series of partnerships revealed in July 2023. The recently announced pacts include Albemarle’s commitment to supplying over 100,000 metric tons of battery-grade lithium hydroxide, ensuring approximately 3 million Ford EV batteries from 2026 to 2030. Similarly, SQM will provide battery-grade lithium carbonate and hydroxide, enabling Ford vehicles to qualify for consumer tax credits under the Inflation Reduction Act.

Another significant partnership is with Canada’s Nemaska Lithium, which will deliver up to 13,000 tons of lithium hydroxide annually. Ford becomes the inaugural customer of Nemaska Lithium, which is supported by the Quebec government and Livent Corp., the world’s third-largest lithium producer. Additionally, EnergySource Minerals and Compass Minerals will supply lithium products starting in 2025, which they anticipate producing in California and Utah, respectively.

By securing these deals, Ford has not only addressed concerns about its lithium supply but has also positioned itself ahead of most competitors in terms of procuring vital battery materials. This strategic approach emphasizes the significance of partnerships in securing a reliable supply chain, as opposed to solely pursuing mergers and acquisitions.

To further solidify its commitment to electric mobility, Ford is currently hosting a two-day event in Dearborn, Michigan, showcasing its plans for a remarkable 16-fold increase in EV production within a few years. CEO Jim Farley assured investors that the necessary mining capacity required to meet Ford’s 2026 production target is almost entirely secured.

Farley also acknowledged that the processing constraints faced by Ford are partially influenced by political factors. The Biden administration is actively encouraging companies to reduce reliance on China by linking EV incentives to sourcing components and materials from North America and U.S. free trade partners. Farley emphasized the significance of on-shoring processing, stating, “On-shoring the processing is going to be the most important controller of cost and also politics. Eighty percent of the processing for nickel and lithium is being done in China, and we need to localize that.”

In conclusion, Ford Motor Co.’s strategic battery-material sourcing agreements with top producers highlight its unwavering commitment to fortifying the supply chain necessary for a massive expansion in electric-vehicle production. As a boutique-style logistics service provider, Sentry Cargo International shares a similar dedication to delivering first-rate logistics services to customers.

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