Ford has always been a leading American Automaker. They pioneered the first mass-produced automobile, the “Model T,” in 1908 and ushered in a new era of industry in the US. With the proliferation of electric vehicles, the world is undergoing another massive shift, and Ford is determined to continue leading. For the legacy automaker to get ahead in this race, it must outperform its competitors on a critical front for electric vehicles (EVs): producing low-cost, high-range batteries. Ford has partnered with another trail-blazing manufacturer for this task: China’s Contemporary Amperex Technology Co. Limited (CATL), the world’s leading battery maker.1 We believe this partnership is creating a compelling investment opportunity for both companies.
In March, Ford announced a $3.5 billion investment in a new EV battery plant, licensing technology from CATL to produce lithium-ion phosphate (LFP) batteries.2 The Inflation Reduction Act (IRA) passed in the US last year provides incentives for EV industry participants to manufacture and sell in the United States. Ford’s CEO, Josh Farley, stated that the Act was the reason they invested in the plant. “The IRA changed the economics for us,” he said in a recent CNBC interview.
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