Ford JV companion SK sees U.S. battery scarcity persisting till 2025

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SAN FRANCISCO, Oct 4 (Reuters) – Ford Motor Co’s (F.N) battery three way partnership companion, Korea’s SK Innovation, expects the U.S. car {industry} to face a battery provide scarcity till 2025 due to the lengthy lead occasions to construct manufacturing services, high SK executives advised Reuters.

SK Innovation’s battery unit, SK On, can be contemplating growing lithium iron phosphate batteries (LFP), which have a bonus in value and thermal stability regardless of a decrease driving vary, Kim Jun, chief government of SK Innovation (096770.KS) and Jee Dong-seob, CEO of SK On, mentioned.

Tight provides of batteries – key to electrical automobiles – pose a problem to the Biden administration, which goals to spice up EV manufacturing and cut back the nation’s reliance on imports for battery cells, parts and supplies.

“The current U.S. battery capacity is far short of meeting demand. Building a factory to meet demand requires a lead time of 30 months, and I see a battery shortage continuing at least until 2025,” Kim mentioned, referring to the time wanted to provide battery cells domestically, together with manufacturing unit web site choice, development and product testing.

In distinction, China is anticipated to have a battery oversupply, and Europe’s provide will probably be according to demand, he mentioned.

Ford and SK On plan to take a position $4.45 billion every to construct three new factories within the United States, with manufacturing slated to start in 2025. learn extra

With the deal for the vegetation, which would be the greatest within the United States, SK mentioned it has an industry-leading order backlog of 1,600 gigawatt hours, sufficient for 27 million automobiles.

SK Innovation spun off its battery enterprise into its wholly-owned unit, SK On, as of Oct. 1.

Kim mentioned Ford Motor CEO Jim Farley, advised him that Ford’s future is “in your hands.”

He mentioned there was solely a slim likelihood that some automakers would achieve efforts to construct cells by themselves with out partnering with cell makers who’ve expertise of mass manufacturing.

“Cell manufacturing is not that simple. It has to go through a lot of trial and error,” Kim mentioned.

SK is contemplating growing LFP batteries for particular purposes comparable to low-priced automobiles, the 2 executives mentioned.

“There is an interest in LFP technology from automakers,” SK On’s Jee mentioned.

Ford and Volkswagen (VOWG_p.DE) are diversifying into LFP expertise, which is the mainstay of Chinese battery makers, following Tesla’s (TSLA.O) lead.

The lower-range, cheaper LFP battery can be gaining consideration for its thermal stability, after a sequence of auto fires involving nickel-based batteries produced by LG and utilized in GM’s (GM.N) Bolt automobiles.

SK, which doesn’t have a document of fireplace accidents, plans to supply high-nickel, pouch-type batteries at its three way partnership with Ford.

Jee expects the U.S. electrical automobile market to speed up progress, pushed by competitors by main gamers like Hyundai (005380.KS), Ford and Volkswagen.

Reporting by Hyunjoo Jin; enhancing by Richard Pullin

The logo of SK Innovation is seen in front of its headquarters in Seoul, South Korea, February 3, 2017. REUTERS/Kim Hong-Ji/File Photo