Ford Will Build 4 Factories in a Big Electric Vehicle Push

Source: By Neal E. Boudette, New York Times • Posted: Tuesday, September 28, 2021

The automaker and a supplier will spend $11.4 billion on three battery factories and a truck plant, creating 11,000 jobs.

A prototype of an all-electric F-150 Lightning truck at Ford’s Rouge plant in Dearborn, Mich., this month.
Rebecca Cook/Reuters

Ford Motor significantly increased its commitment to electric cars and trucks on Monday by announcing that it would spend billions of dollars to build three battery factories and an electric truck plant in the United States, creating 11,000 jobs over the next four years.

The company described the investment, which it said would enable it to produce more than one million electric vehicles a year in the second half of this decade, as the single largest in its 118-year history. All told, Ford and a South Korean supplier will spend $11.4 billion on the project.

The announcement is the latest multibillion-dollar move by an automaker to quickly move to electric vehicles and phase out gasoline-powered cars and trucks as part of the global effort to combat climate change. Transportation, chiefly cars and trucks, is responsible for about 30 percent of U.S. greenhouse gas emissions, more than the power sector.

President Biden is pressing Congress and other countries to enact policies that would quickly move the world away from fossil fuels, and Ford’s announcement could influence negotiations in Washington over Mr. Biden’s climate and energy agenda. It could also become a talking point at a United Nations climate change conference that Mr. Biden and other world leaders will attend in Glasgow in November.

“I think the industry is on a fast road to electrification,” Ford’s executive chairman, William C. Ford Jr., said in an interview. “And those who aren’t are going to be left behind.”

Environmentalists have long criticized automakers for not responding forcefully enough to climate change and for selling large, gasoline-guzzling trucks and sport utility vehicles. But the industry has made a hard pivot to electric vehicles in recent months because of growing environmental concern — and because of the competitive threat posed by Tesla, the dominant maker of electric cars.

Established automakers like Ford and General Motors are racing to catch up to Tesla, which is on track to sell more than 800,000 electric cars this year. Tesla has become the most valuable automaker in the world by far, with a market capitalization of nearly $800 billion. Ford’s market value is $56 billion.

Ford said it would build two battery plants in Kentucky and one in Tennessee, all in a joint venture with its main battery cell supplier, SK Innovation of South Korea. In addition, the company will build an assembly plant at the Tennessee location to churn out electric pickup trucks. Ford will invest $7 billion and SK Innovation $4.4 billion, the companies said.

At least some of the new jobs, assembling electric trucks, are likely to be unionized. That would be a win for Mr. Biden, who has argued that the transition to electric cars and renewable energy can create millions of well-paying union jobs. But it is not clear how successful unions will be at organizing workers at the three battery factories jointly owned by Ford and SK Innovation.

The top wage for a Ford assembly line worker represented by the United Auto Workers is $32 an hour under a contract the company and union reached in 2019. Unionized workers at parts factories typically make less than those assembling cars.

Other big automakers are also pouring billions into battery and electric car plants. G.M., which said this year that it aimed to end production of internal-combustion vehicles by 2035, plans to build four battery plants in the United States over the next few years. Ford expects electric models to make up 40 percent of its production by 2030.

Even companies that have resisted electric cars have been changing their tune. Toyota Motor, in a sudden shift in strategy, said this month that it planned to spend billions of dollars over the next decade to build battery factories and hoped to sell two million electric cars a year by the end of the decade. Previously, Toyota planned to focus on making hybrid cars and trucks and expressed doubts that fully electric vehicles would take off.

Several other automakers, including Volkswagen, Mercedes-Benz, BMW, Hyundai and Stellantis, which was formed by the merger of Fiat Chrysler and France’s Peugeot, are also investing billions of dollars to produce electric vehicles.

“All these companies are building battery plants because you have to have your own production if you’re going to make E.V.s in high volume,” said Mike Ramsey, a Gartner analyst. “The fact they are spending billions of dollars means they’re saying: ‘There’s no turning back. We’re really going to do this.’”

But Mr. Ramsey said it was not clear how quickly consumers would embrace electric vehicles, which are still more expensive than conventional cars and trucks even after federal and state incentives. Charging stations will also have to expand significantly as more electric models hit the road.

“There’s grounds to have real concerns about where demand will actually be,” Mr. Ramsey said.

Ford’s new truck plant and battery factory in Tennessee will be in Stanton, about 50 miles northeast of Memphis. To be called Blue Oval City, the campus will cover six square miles, substantially larger than the Ford Rouge plant that Henry Ford built in the Detroit area a century ago. The Tennessee campus is expected to employ 6,000 people and will house suppliers and a battery recycling operation as well as the truck and battery factories. Ford and SK Innovation will invest $5.6 billion at the site.

The truck plant is supposed to produce a new battery-powered F-Series pickup truck, following the previously announced F-150 Lightning, but Ford declined to disclose details about it.

The two plants in Kentucky will be in Glendale, about 50 miles south of Louisville, and are expected to create 5,000 jobs, at a cost of $5.8 billion. The batteries made there will be used at North American plants that will produce Ford and Lincoln electric vehicles. Ford already employs about 13,000 people at two truck and S.U.V. plants in the Louisville area.

“We have enormous demand for our electric vehicles now, and this is going to help us accelerate,” Ford’s chief executive, Jim Farley, said in an interview. “This is going to give us a million units of supply just for Ford.”

This year, Ford began selling an electric S.U.V., the Mustang Mach-E, which has taken market share from Tesla. The company plans to add an electric delivery van by the end of the year and the electric F-150 Lightning next spring.

The company said people and businesses had placed 150,000 reservations for the F-150 Lightning. The strong interest persuaded Ford to invest an additional $250 million in the Dearborn, Mich., plant where the Lightning will be made, increasing potential production and adding 450 jobs.

The U.A.W. is hoping to represent the production workers at the four new plants. But it will have to win approval from employees to do so because “right to work” laws in Tennessee and Kentucky bar union membership as a condition of employment.

While the union represents tens of thousands of workers assembling cars and making major parts for Ford, G.M. and Stellantis, it has struggled to organize workers at the factories of foreign automakers and their suppliers. Many of those plants are in the South, where workers and conservative politicians view unions more skeptically.

“Obviously, they’ll have to hold an election, and it’s up to the workers, but Ford Motor Company has had a tremendous partnership with the U.A.W., and I wouldn’t want to change that,” Mr. Ford said.

The U.A.W.’s president, Ray Curry, is scheduled to attend the official announcements on Tuesday with Ford executives and the governors of Kentucky and Tennessee.

“We look forward to reaching out and helping develop the new work force to build these world-class vehicles and battery components,” Mr. Curry said in a statement.

Ford’s E.V. ambitions have been complicated this year by the shortage of computer chips that has disrupted production for automakers around the globe. Mr. Farley said that Ford’s supply of computer chips was improving and that the number of vehicles it produced in the third quarter of the year would be “markedly up” from the second quarter.

“Our battery electric vehicles, the demand for them and the reaction to them has been incredible,” he said. “And we have to break a lot of constraints. We have a lot of work to do.”