Ford & SKI To Invest $11.4 Billion In New Assembly Plant & 3 Battery Factories

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For years, we at CleanTecnica have been wondering whether the EV revolution begun by Tesla would put legacy automakers out of business. They were slow to react, often dragging their feet, making flowery promises backed by few actual commitments, and even lobbying governments to delay electrification of the transportation sector.

Things have changed in the past 18 months, however. Those sleeping giants have begun to stir. Volkswagen is going all out to make the electric car transition happen, Hyundai Group is right behind, and recently General Motors, Ford, and even stodgy Stellantis have begun putting their shoulders to the wheel of change.

The other day, we wrote about Jim Farley, who has been the CEO of Ford Motor Company for less than a year, telling the press his company needs to find ways to make electric cars more affordable. Just days later, Ford and SK Innovation announced a new partnership that will pump $11.4 billion dollars into a new factory to build the next generation F-150 Lightning and create three new battery factories in Kentucky and Tennessee.

Just outside Memphis, we’re building the biggest auto plant in @Ford’s history.

It's called Blue Oval City & is where we'll build the next generation of electric F-Series pickups & advanced batteries.

It’s the new future of American manufacturing. https://t.co/RRNq0a9Dr4 pic.twitter.com/0BhhQahZWY

— Jim Farley (@jimfarley98) September 27, 2021

The new assembly plant will be the first all new factory from Ford in the past 50 years. Located in Stanton, Tennessee, a wide spot in the road northeast of Memphis, the site will cover 9 square miles — the largest facility built by Ford in its 118-year history and three times the size of the historic Rouge factory in Michigan that has been cranking out cars for nearly a century.

Lisa Drake, Ford’s COO for North America, tells Reuters the site will have room for future expansion. “For us, this is a very transformative point where we are putting our capital in place now in a very big way to lead the transition to EVs.” According to the Financial Post, Drake emphasized there will be room to expand on that site as needed.

The factory will be dedicated to producing electric F-Series trucks, beginning with the second generation F-150 Lightning, which will be built on a dedicated electric truck platform. The first Lightnings will utilize a modified chassis adapted from the current F-150 which is equipped with gasoline or diesel engines.

Ford expects to employ 5,800 workers at the new factory in Tennessee, which will consist of the assembly plant, a battery factory, and a supplier park. The entire facility will be a zero waste site that will recycle materials and scrap to avoid sending any materials to local landfills. The company recently invested $50 million in Redwood Materials, which proposes to be a leader in recycling lithium-ion batteries. “This is a new Ford,” Farley told The Verge. “This is show, not tell time.”

He added that electric cars today are in a similar place as smartphones were in 2007. “This story is not about propulsion. This story is about digital vehicles with embedded systems, and a customer experience led through software that gets better every day, and changes the definition of a car from something that gets you from point A to point B, to something that enables your full life.”

SKI & Kentucky, Too

In central Kentucky, Ford plans to build a “dedicated battery manufacturing complex” with SK Innovation. Dubbed the BlueOvalSK Battery Park, the complex will cost $5.8 billion and create 5,000 jobs. Batteries for the company’s next-generation Ford and Lincoln EVs will be assembled at the site’s twin battery plants. The construction money will flow from a new joint venture called BlueOvalSK. In all, Ford is putting in $7 billion to the combined venture while SK Innovation is kicking in $4.4 billion. This partnership may have been just announced this week, but you can be certain all this was swirling around in the background when SK Innovation and LG Energy Solution were locked in a patent infringement dispute earlier this year.

Farley estimates that Ford will need 140 GWh of battery manufacturing capacity a year and expects the three new battery factories to provide 129 GWh. That compares to the 140 GWh GM and LG Energy Solution are planning to make at their two battery factories. Volkswagen expects to manufacture 240 GWh of batteries a year at its 6 European battery factories, with more coming from its newly announced factory in China.

As always, Tesla is out in front. Elon Musk says the battery factory adjacent  to the Grüneheide Gigafactory in Germany will be able to produce 250 GWh of batteries when fully operational. That is approximately equal to today’s entire world production capacity.

Training Programs Included

It is one thing to say Ford will hire 11,000 new workers to staff its new factories in Tennessee and Kentucky, but it’s another thing to find qualified employees. Ford says it will spend $525 million on a nationwide job training program, starting with $90 million for a pilot project in Texas. The hope is to train the next generation of workers on the intricacies of EV manufacturing and maintenance, not only to work at Ford’s factories but also at its dealerships and to make repairs in the field.

“Our industry has an enormous shortage of technicians,” Farley says. “We need to recruit a huge number of technicians who are good at doing service on the road.” Hmmm….does that sound like Ford plans to emulate the Tesla system of sending technicians to where people live and work to perform needed service chores? If so, over the air updates may be the worst thing that every happened to dealer service departments, which many dealers depend on for their profitability.

Ford is receiving financial incentives from both states in exchange for agreeing to build its new factories. Tennessee and Kentucky are also contributing money in the form of training grants to ensure that future workers have the necessary skills for those new jobs. Farley says the primary consideration was finding locations with competitive energy rates, since a battery plant uses five times the energy of a traditional assembly plant. Ford also prioritized finding “greenfield” sites with no prior environmental issues so that it could build quickly. “We need to move fast,” he says.

Another issue is whether those 11,000 new jobs will go to union workers. The Financial Post reports that the UAW, which represents many of Ford’s US hourly workers, has said the automaker has a “moral obligation” to make sure any battery plant jobs are good paying union jobs. If Joe Biden’s infrastructure bill passes with significant federal subsidies for electric cars built in America by union workers, that will make union representation even more important.

Lisa Drake says the workers will be free to decide whether to join a union or not and adds that Ford has emphasized to SKI that it must not discourage union membership. But keep in mind that Tennessee and Kentucky are both firmly anti-union states like most of its neighbors in the southeast. There’s a reason mill owners fled New England in the 1950s to non-union states. The UAW may try to organize the new factory workers, but they won’t be handed it over on a plate.

The Takeaway

Here’s the one detail we haven’t mentioned yet. Ford is not expecting these new factories to be up and running until 2025. Tesla usually only needs 18 months to go from concept to products rolling out the door. The news from Ford is extremely encouraging, but it is fair to say the company still seems to lack the sense of urgency of its California competitor.

The other thing to keep in mind is that someday in the not to distant future, the Tesla Cybertruck is expected to arrive. The F-150 Lightning is an awesome vehicle, but it is very much a continuation of the American pickup truck idiom. The Cybertruck is a compete departure.

Truck buyers are a very stodgy group of folks. Will they embrace the Cybertruck, forcing Ford, Dodge, and Chevy to come up with futuristic designs of their own or will truck owners thumb their noses at the Cybertruck and force Tesla to build a more mainstream truck? The answers to those questions are critically important. Nobody in their right mind would bet against the redoubtable Musk, but Ford has just put an $11.4 billion marker on the table. This could get interesting!