by Keith Naughton | bloomberg
Ford Motor Company and South Korea’s SK Innovation Company plan to spend $11.4 billion to build three battery factories and an assembly plant for electric F-series pickup trucks in Tennessee and Kentucky, the largest in the US automaker’s history. Big investment.
The project will create two sprawling sites to employ about 11,000 workers to manufacture electric vehicles and the batteries to power them, the companies said on Monday. Ford is spending $7 billion, while battery partner SK is spending $4.4 billion. They start coming online in 2025.
The projects are part of Ford’s plan to invest $30 billion in electric vehicles by 2025, become a player in a market dominated by Tesla Inc. and challenge General Motors Company’s image as a legacy automaker. Since becoming Ford’s boss a year ago, CEO Jim Farley has switched to an all-electric future, earning the plug on the electric F-150 from President Joe Biden and initiating a battery joint venture with SK. efforts have been accelerated.
Shares of Ford were up 3.1% to $14.60 in premarket trading Tuesday as of 9 a.m. in New York. The stock was up 61% this year as of Monday’s close.
The Tennessee site known as Blue Oval City will occupy six square miles, making it three times the size of Henry Ford, the historic rouge complex Henry Ford built a century ago in Michigan. This will include a battery plant employing about 2,500 employees and an assembly plant with 3,300 employees to produce an electric version of Ford’s largest F-series pickup, its most profitable product.
In Kentucky, where Ford already has truck and SUV factories, the automaker and SK will build two battery plants employing about 5,000 workers. Ford said the three battery factories would have the capacity to churn out power sources for more than one million electric vehicles annually.
The big investment follows a doubling of production at Ford’s Michigan factory this month to build the electric F-150 Lightning pickup for sale next year. The company says it already has 150,000 reservations for plug-in pickups. Its battery-powered Mustang Mach-E has also started selling a gasoline-fueled version of the pony car.
“Early results would say there is a huge demand for electrified vehicles,” Kumar Galhotra, Ford’s president of US and international markets, said in an interview. “The level of this investment shows how confident we are.”
The Stanton, Tennessee, F-Series factory will be the first new assembly plant built by Ford, the company said. United Auto Workers will not automatically represent new workers and will have to organize assembly and battery plant workers in both states, which have rights to work laws that labor groups have seen as hostile.
The UAW is concerned that the transition to electric vehicles could cost jobs. A study by AlixPartners found that it takes 40% less labor to assemble an electric motor and battery than a traditional internal combustion engine.
“UAW looks forward to continuing our long-standing partnership with Ford as consumers make the transition to building the right electric vehicle,” UAW President Ray Curry said in a statement. “We look forward to helping this new workforce grow and develop.”
Galhotra said Ford has a “great relationship” with UAW, but it will be up to new employees whether or not to join the union.
“We have to let the employees make the decisions,” he said.
To get their two biggest economic development projects off the ground, Tennessee and Kentucky provided incentives to Ford and SK. Tennessee is offering $500 million, pending a special session of the state legislature to approve the deal. Kentucky is providing a $250 million forgivable loan, $36 million in training funding, infrastructure improvements, and a 1,551-acre site in Glendale, south of Louisville.
Farley, along with Ford Executive Chairman Bill Ford and top executives from Seoul-based SK Innovation, will visit both states on Tuesday for official announcements.
“This is a transformative moment where Ford will lead America’s transition to electric vehicles,” Ford, Henry Ford’s great-grandson, said in a statement.
Ever since Farley announced plans in May to increase Ford’s EV spending by a third, the company has become more optimistic about how quickly the market for battery-powered vehicles will develop.
“We’re building more, based on our experience with the Mach-E and F-150 Lightning,” Lisa Drake, Ford’s chief operating officer in North America, told reporters on Monday.
When Ford first announced the SK partnership in May, the plan was to build two US battery plants, but that has now grown to three. Those plants, along with a battery plant in Georgia that will supply the F-150 Lightning, will supply Ford with 141 gigawatt-hours of batteries, Galhotra said. It meets Ford’s demand target in North America for now, which is to have 40% of its sales electric by 2030.
Galhotra said, “We are in the early stages. “We’ll see how it develops. We may need more.”