Ford Motor Co announced today three significant deals pertaining to the supply of lithium products, including lithium hydroxide. These agreements are part of Ford’s strategy to accelerate the production of electric vehicles (EVs) and achieve a target of manufacturing 2 million EVs by the end of 2026. The company’s stock showed a slight increase of approximately 1% before the market opened.
As North American automakers race to secure battery materials and keep up with Tesla Inc, the market leader in EVs, Ford’s deals are aimed at meeting the surging demand for eco-friendly vehicles. The first agreement is a long-term deal with Nemaska Lithium, a Canadian company. Under this contract, Nemaska Lithium will supply Ford with up to 13,000 tons of lithium hydroxide annually. In addition, Ford has entered into a contract with EnergySource Minerals to source lithium hydroxide from a site in Imperial Valley, California, which is expected to become operational in 2025.
Ford’s third deal involves a five-year agreement with Albemarle Corp, a supplier of specialty chemicals. Albemarle will provide Ford with more than 100,000 metric tons of battery-grade lithium hydroxide, which will be used to produce approximately 3 million future Ford EV batteries.
By partnering with Nemaska Lithium, Ford aims to leverage the lithium hydroxide supplied to qualify its vehicles for consumer tax benefits under the U.S. Inflation Reduction Act. Nemaska Lithium is a joint venture between Investissement Québec, the economic development agency of the Québec government, and Livent.
Earlier this year, Ford had also joined forces with PT Vale Indonesia and Zhejiang Huayou Cobalt of China as a partner in a $4.5 billion nickel processing plant in Indonesia. These recent deals further strengthen Ford’s sourcing capabilities and support its goal of producing 2 million EVs by the end of 2026.
Ford’s announcement of these deals aims to address doubts in the market regarding the company’s ability to achieve its ambitious EV production targets. Despite concerns, Ford reaffirmed its full-year guidance of $9 billion to $11 billion of adjusted earnings before interest and taxes, along with approximately $6 billion in adjusted free cash flow. The automaker also expects its electric vehicle unit to incur losses of around $3 billion in the current year.