Automakers bulk up on batteries in a race to electrify
The founders of Tesla expected that once they built a compelling electric car, and demonstrated that it could deliver performance equal to or better than that of gas models, the major automakers would rush to build EVs of their own, and would beat a path to the startup’s door. Well, they were right—but just about 12 years too early. And it took a lot more than building the Roadster to get Big Auto’s attention.
Above: Tesla Model X overlooks the company's Gigafactory in Nevada in the early days of construction (Source: Tesla)
In the event, the global auto giants allowed the Silicon Valley upstart to become the world’s most valuable automaker, and to consistently outsell some of their flagship models, while earning one of the highest profit margins in the auto industry, before they began to get serious about building their own EVs. Now, after a decade of dithering, automakers are getting ready to do what needs to be done—electrifying high-volume vehicle segments and building a supply chain for mass EV production.
It’s the former that grab the headlines, but it’s the latter that truly telegraphs automakers’ intentions. Yes, the Ford F-150 Lightning and Chevy’s electric Silverado sound exciting, but these characters have announced lots of exciting EVs in the past, then produced just enough to satisfy California regulators, and cancelled them after a few years. If automakers intend to produce mass quantities of EVs, they’ll need to build a massive supply chain, including battery factories on an unprecedented scale.
And that’s what they’re doing. As Nick Carey reports in Reuters, the flurry of recent announcements of new factories and supply agreements increasingly looks like a race to secure battery supplies. Dozens of new battery plants are planned for Europe and North America.
A lively EV rivalry seems to be developing between GM and Ford. The USA’s largest automaker says it plans to invest $35 billion in electrification between now and 2025, when it hopes to offer 30 electrified models globally. GM currently has two US battery factories under construction, in Lordstown, Ohio and Spring Hill, Tennessee, and has teased plans for more, plus a new battery development facility in Michigan.
Above: Lordstown EV battery factory (Source: GM)
Not to be outdone, Ford, the beta dog of Detroit, recently announced plans for a huge new EV assembly plant, and three new battery plants, then doubled down with an announcement that it will invest up to 230 million pounds ($316 million) to retool an engine factory in England to produce EV powertrains. A union spokesperson hailed the decision, saying it would “help to safeguard Ford jobs at the site into the future.” That’s a welcome bit of reassurance to those who fear (with some justification) that the transition to e-mobility will cost a lot of jobs.
As the Big Two duke it out, EV boosters are cheering them on. Fellow journalist John Voelcker praised Ford and GM for their new battery plant announcements in a recent Car and Driver article, and challenged #3 Stellantis to do the same. A few days later, voila! Stellantis announced an agreement with LG Energy Solution to build a new facility to produce battery cells and modules for North America.
That’s far from all the battery-production news. Daimler recently took a 33% stake in battery cell manufacturer Automotive Cells Company (ACC), which has big plans to establish battery production in Europe. Britishvolt is building a battery cell factory in Quebec to serve the North American EV industry. Even Toyota, the EV industry’s number-one naysayer, plans to bulk up on batteries with a global investment of around $13.5 billion for battery development and production.
The feeding frenzy is also attracting players from outside the auto industry. Taiwan’s Foxconn, best known for assembling consumer electronics for Apple, has unveiled three new EV prototypes, and is also going to build cars for startups Lordstown and Fisker.
Above: Inside Foxconn's efforts to get into the EV game (YouTube: Reuters)
Tesla has unquestionably forced the legacy automakers to move a lot faster—the days when it took ten years to bring a new model from drawing board to dealership are long gone. But Volkswagen CEO Herbert Diess, for one, understands that they still aren’t moving fast enough. That’s why he invited Elon Musk as a surprise guest to a recent managers’ meeting—to emphasize the point that VW needs “faster decisions, less bureaucracy and more responsibility” in order to speed up the transition to e-mobility, which Diess called the biggest transformation in VW’s history.