DOE Hands GM $2.5B, Ford Makes Flurry of Moves as Race for EV Market Heats Up
A market update on continued acceleration in the electric vehicle (EV) sector, featuring two of the biggest players in the game: GM and Ford.
General Motors (GM) made headlines last week for securing a $2.5 billion loan from the Department of Energy (DOE) and inking new supply deals with Livent and LG Chem. Those moves came on the heels of a massive press release from Ford, released several days earlier on July 21, detailing its new battery capacity plan.
Both American car giants are investing billions in expanding their domestic supply chains for EV batteries as the global market faces surging raw material prices, mineral shortages and other supply stressors in the face of unprecedented consumer demand.
Below, we’ll summarize the carmakers’ recent plays and how they relate to broader market trends.
GM Secures DOE Loan & New Supply Deals
On July 25, GM secured a $2.5 billion conditional commitment from the DOE’s Loan Programs Office to support its construction of lithium-ion battery cell production facilities in Ohio, Tennessee, and the car giant’s home state of Michigan.
The loan will serve GM’s Ultium Cells joint venture with battery maker LG Energy Solution, a subsidiary of South Korean chemical giant LG Chem. At the new factories, Ultium Cells will supply nickel-cobalt-manganese-aluminum cells for GM’s growing EV lineup.
GM also inked a new long-term supply deal last week with LG Chem, providing enough cathode active material (CAM) for 5 million EV units through 2030. On the same day, it announced another supply agreement with Philadelphia-based chemical firm Livent to source lithium hydroxide from Argentina.
A look inside GM’s battery manufacturing facility in Brownstown, Michigan. Image used courtesy of GM
Both deals serve GM’s ongoing production expansions in the U.S. and North America, where it aims to reach a capacity of 1 million EVs by the end of 2025. The LG Chem agreement will explore the localization of a CAM manufacturing facility in North America by 2025, and the six-year deal with Livent aims to transfer 100% of downstream lithium hydroxide processing to GM’s North American operations.
Jeff Morrison, GM’s VP of global purchasing and supply chain, stated in the Livent announcement that localizing the lithium supply chain is “aligned with our approach to responsible sourcing and supply chain management and demonstrates our commitment to strong supplier relationships.”
As EE Power covered last week, GM is building a nationwide charging network to keep pace with its expected sales growth. The company plans to launch 30 new EVs globally by 2025, with about 20 available to North American customers. In total, GM has set aside $35 billion to invest in EV and autonomous vehicle (AV) development through the mid-decade.
Relatedly, the DOE loan is the first battery cell manufacturing project funded by the agency’s Advanced Technology Vehicles Manufacturing Program, which is pumping billions of dollars into domestic manufacturing for EVs, components and materials.
Ford Unveils Massive Battery Capacity Expansion
Meanwhile, Ford—arguably GM’s biggest competitor and another key stakeholder in the U.S. EV race—released its new battery capacity plan last month.
The Michigan-based car giant announced it has secured enough battery capacity (60 GWh annually) to deliver 600,000 EVs by late 2023, which is about 70% of what it needs to reach its target of 2 million EVs by 2026.
Production of Ford's F-150 Lightning all-electric truck in Dearborn, Michigan. Image [modified] used courtesy of Ford
Like GM, Ford has invested heavily in expanding its U.S.-based battery material supply chain.
Starting in 2026, Ford will localize 40 GWh of its annual lithium iron phosphate (LFP) cell production, a new part of its chemistry portfolio, in North America. Ford says it has also secured most of the nickel it will need by then for production of its nickel-cobalt-manganese cells; the company locked in several lithium supply contracts from sources in Argentina, Australia and the U.S. as well.
Ford is working with South Korea-based SK On and LG Energy Solution (also a GM partner, as mentioned above) to meet its production capacity targets for late 2023. SK On and Ford are investing in a new North American facility to produce cathode materials for their joint venture, BlueOval SK.
The pair teamed up last year to build three EV battery plants in Kentucky and Tennessee, an $11.4 billion investment expected to provide 129 GWh in annual production capacity.
In recent weeks, Ford has announced a slew of new agreements and partnerships to source its EV materials through domestic suppliers. That includes Kansas-based Compass Minerals, which signed a memorandum of understanding (MOU) last month to provide lithium via its lithium brine development project in Utah.
Ford will also use U.S.-sourced raw materials from two Australian partners: It has a five-year agreement with ioneer to source lithium carbonate from Nevada and an MOU with Syrah Resources for the supply of natural graphite anode material in Louisiana.
Ford is ramping up its North American production capacity for EV battery materials. Screenshot used courtesy of Ford
Overall, Ford is betting big on EV sales growth, spending over $50 billion on EV development through 2026.
In the Backdrop: Trends Behind Expanding US Production
With global supply chains reeling from material shortages, price hikes and other constraints, more companies are cashing in on government incentives to shore up their supply chains domestically.
As a result, state and federal subsidies are a growing force in propping up the EV sector. According to the International Energy Agency (IEA), the U.S.’s public EV spending tripled last year to $2 billion, while consumer spending doubled to $30 billion.
U.S. government spending on EVs tripled last year, but still pails in comparison to China and Europe. Image used courtesy of the IEA
Ford and GM are just two of many industry stakeholders standing to benefit from a wave of new federal funding programs and incentives.
The DOE’s battery policies and incentives database lists more than 100 active incentive programs related to battery development for EVs and energy storage applications. Many stem from the Bipartisan Infrastructure Law, which provides a whopping $7 billion for critical mineral supply chains and $7.5 billion for EV charging infrastructure.
Subsidies aside, it will likely take the U.S. years to grow substantially from its current position in the global EV battery supply chain, accounting for just 10% of the world’s EV production and 7% of battery production capacity. Those shares are meager in comparison to China, which still claims 70% of all battery production capacity announced through 2030, per the IEA.