What is the business logic behind Ford's self-produced batteries?

by:CTECHi     2021-09-01
Recently, Ford Motor Company President and CEO Jim Farley (Jim Farley) said at the Reuters Automotive Summit: “With the increase in sales of pure electric models, Ford is now considering its own production of batteries.” The words came out. It has caused a lot of waves in the automotive media, because foreign media have previously reported that Ford tends to buy batteries from third-party suppliers, and Ford has not seen too much action in self-produced batteries. . In fact, there is another sentence after Farley: 'If we discussed this one year or two years ago, it would be too early. If we discussed it in 5 years, it would be too late. The best time to put things on the agenda. Self-produced batteries can not only solve the problem of battery capacity, it is also a strategic investment for Ford’s future electrification development.' Generally, it is very important for large automakers to decide whether to produce batteries independently. To a large extent, it is a commercial problem, because the current battery technology is actually very mature, and there is no technical obstacle that cannot be overcome. For Ford, the underlying logic behind it is to transform the profits of battery suppliers into lower production costs through independent production of batteries, so as to provide users with more affordable electric vehicles. Automakers’ self-produced batteries naturally have obvious advantages: for example, they don’t have to worry about being “stuck” on capacity by suppliers. For example, in 2017, because Panasonic’s battery capacity can’t keep up with Tesla’s capacity ramp-up, it drags down Model 3 mass production. speed. In addition, automakers' independent production has greater flexibility in battery shape design, and later battery maintenance services do not need to rely on suppliers. However, there is only one reason why most manufacturers do not choose to produce their own batteries, and that is that cost control is too difficult. Before mass production is achieved, the huge Ru0026D costs are enough to discourage car giants. Farley has now announced that Ford will produce batteries independently for two reasons: On the one hand, Ford's 'product offensive' in the past two years has given him a lot of confidence. The MustangMach-E, the first pure electric SUV released at the end of last year, will be delivered in North America soon, and will gradually be delivered on a large scale in the European market next year. The E-Transit released not long ago will also be delivered in North America and Europe at the end of 2021 and early 2022. And Ford previously announced that the pure electric F-150 will also be delivered in North America in mid-2022. Although the pace of a new car a year is not fast, it is important to know that F-150 and Transit are the best-selling models that have occupied their respective market segments for a long time. They have a good reputation and a broad mass base. The sales of the pure electric version must be It will also be considerable, and large-scale mass production can share the Ru0026D and production costs of the battery. The second reason is that Ford has adopted a differentiated electrification strategy, that is, to take the lead in electrification transformation with existing dominant star models, and use its advantages in commercial vehicles to seize the market. Among the pure electric models currently planned by Ford, MustangMach-E, E-Transit and pure electric F-150 can all be said to be the 'jewels in the crown' of the Ford brand. At present, the major battery manufacturers on the market, whether they are LG Chem, SK Innovation, Panasonic or Ningde era, mainly produce batteries to meet the needs of passenger cars, while commercial vehicles such as pure electric F-150 and E-Transit are for power batteries. The battery capacity has higher requirements, and external procurement of batteries is easily restricted by insufficient battery capacity flexibility. Not long ago, foreign media reported that Ford will hire another 350 employees and invest US$100 million to expand its production capacity for pure electric F-150 and E-Transit. It can be seen that Ford has placed a heavy bet on these two pure electric models, so Ford naturally does not want the production progress of these two strategic models to be in the hands of battery suppliers. In addition to self-produced batteries, Farley also said recently: Ford pure electric cars will be priced at no more than 100,000 U.S. dollars to create pure electric cars that more people can afford. Although the price of pure electric vehicles on the market is generally much higher than that of fuel vehicles of the same level, Ford promises that its pricing will not be affected by the mainstream price range of the market. Although taking the parity route is a means to strengthen one's own competitiveness, the deeper reason must be derived from the original intention of Mr. Henry Ford to start the business-to make cars that everyone can afford. More than a hundred years ago, Ford launched a mass production line of Model T cars, turning cars from a 'rich man's patent' into a mass consumer product of several hundred dollars. Since Jim Farley took office on October 1, Ford has not only accelerated the production plan for pure electric models, but also set the tone for the overall positioning. It can be seen that a future pure electric layout of Ford is gradually becoming clear.
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