The move may help broaden the appeal and accessibility of electric vehicles as the industry continues to pivot from gasoline-powered vehicles in an effort to curb fossil fuel use and combat climate change.
“We are moving now to deliver breakthrough electric vehicles for the many rather than the few,” Ford chief executive Jim Farley said Monday in a news release.
The projects represent a significant turn for Ford, the 118-year-old automaker that pioneered assembly-line manufacturing and helped make automobiles a fixture of American life.
Facing increased pressure from climate-concerned governments around the globe, the company now wants electric vehicles to account for at least 40 percent of its sales in the United States and 100 percent of its sales in Europe by 2030.
Tesla has taken an early lead in that arena with a suite of sleek, high-end vehicles that captured about two-thirds of the battery-powered electric vehicle market in 2021, according to the trade publication InsideEVs. Chevrolet, which is owned by General Motors, is a distant second at 9.6 percent, followed by Ford’s 5 percent market share.
Ford burst on the scene with its all-electric Mach-E, introduced in 2019 as a way to capitalize on a known nameplate, the Mustang, and bring it into the 21st century. But legacy automakers have mostly struggled to attract buyers to their electric offerings.
Many of today’s electric vehicles are still too pricey for the average U.S. car buyer. They represent a tiny slice of the overall auto market, accounting for just 0.4 percent of all vehicles in operation through the first half of 2021, according to data collected by the consumer credit-reporting company Experian. Electric vehicles accounted for 2.4 percent of new auto registrations in 2021, compared with 1.7 percent in 2020.
Ford rival GM has also invested in all-electric facilities, dedicating one legacy auto factory to the manufacture of its electric Chevrolet Bolt and pouring additional resources into reviving an old name, the Hummer — this time in all-electric fashion. But GM, which is also working with a South Korean partner in LG Chem, has had to recall all of its Bolt vehicles over an issue that has arisen with several EV models across the industry: the risk of fires in lithium-ion batteries. The recall, totaling more than 140,000 vehicles, arose over concerns about spontaneous fires arising from the cars’ battery packs.
The new battery production facilities should allow Ford to significantly expand its production volume over the next decade, experts say. Together, they will be able to produce more than a million battery packs each year.
The first factory, called Blue Oval City, will be situated on six square miles in western Tennessee and employ about 6,000 people. The factory will produce electric pickup trucks and the parts and batteries to support them. The site will be established at Memphis Regional Megasite, an undeveloped industrial complex about an hour from Memphis.
The Tennessee Valley Authority, the power utility, celebrated the move for furthering its goal of making Tennessee a hub for electric vehicles. The authority has laid out a goal of putting 200,000 electric vehicles on roads in the TVA’s service area by 2028.
It says Tennessee has become the No. 3 hub in the country for electric vehicle manufacturing because “auto manufacturers love our low industrial rates and high power reliability.”
The state has tried to bolster that momentum with incentives, and the TVA says it is embarking on a strategic plan to build an electric vehicle fast-charging network for the region.
“Reliable, low-cost, clean energy attracts world-class companies like Ford to the Tennessee Valley,” chief executive Jeff Lyash said in a statement. “Bringing jobs and capital investment to this region is what we do at TVA — it’s a fundamental part of our mission — and by helping to bring companies like Ford to this region, we are creating the jobs of the future.”
A pair of battery manufacturing plants will also be established in central Kentucky. They will be financed and run by BlueOvalSK, a new joint venture of Ford and South Korean energy company SK Innovation.
Barclays analyst Brian Johnson said in a note to investors that the new factories should help Ford in an electric vehicle market where it faces stiff competition from rivals.
“This new production capacity for batteries and BEV underscores that Ford is (arguably belatedly relative to GM) building the needed foundation in terms of platforms and battery capacity to be a winner in the EV market,” Johnson wrote, using an acronym for battery-powered electric vehicles.
In previous investor notes, Johnson has praised Ford’s new F-150 all-electric pickup truck after taking a test drive.
“While we knew that Ford was working on an all-electric F-150, our expectations (and those of many investors) was that the truck would be a slow, expensive and boring compliance variant intended primarily for fleet customers who wanted to reduce their carbon footprint,” Johnson wrote in a May 2021 research report. “But what we rode in was a stylish, fast truck with fun/useful features at an affordable price.”
The electric F-150 is slated for public release in spring 2022. As of May 2021, it was priced from $39,974 to $52,974, making it more expensive than the cheapest Tesla cars, but less expensive than Tesla’s “Cybertruck,” according to Barclays.
Johnson added that the new vehicle is likely to “help change the image of Ford as a dinosaur behind” in electric vehicles.
Ford’s investment is also a boost for President Biden’s economic agenda. His economic advisers have sought to intertwine climate solutions with job creation, in the hope that new jobs in clean energy, electric vehicles and their related component suppliers might soon replace existing jobs in petroleum or the dwindling coal industry.
Brian Deese, director of the White House National Economic Council, said the Ford announcement shows that Biden’s job-creation strategy is working.
“Ford’s announcement to invest in good-paying union jobs and wages shows that approach is starting to pay off,” Deese said Tuesday in a tweet. White House climate adviser Gina McCarthy similarly said the investment “shows manufacturing electric vehicles can create thousands of good-paying, union jobs at home.”
Because of laws regarding union membership in Kentucky and Tennessee, newly hired Ford workers will not have to join the United Auto Workers, which has long represented assembly-line workers in Detroit and elsewhere. Unions will face an uphill battle to convince new employees in those states, where less than 10 percent of the workforce is unionized.