By on February 12, 2021

Battery suppliers LG Chem and SK Innovation have what could be politely described as an intense rivalry. With the automotive industry desperate to secure reliable access to the most essential components for the planned electric vehicle offensive, chemical companies specializing in electronics are very much in demand and they’re all jockeying for power.

On Wednesday, the U.S. International Trade Commission (ITC) sided with LG Chem after it had accused SK Innovation of misappropriating trade secrets pertaining to EV battery technologies. But Ford CEO Jim Farley is asking the South Korean businesses to call a ceasefire and settle things out of court, presumably through the transfer of a large sum of money.

Ford cares because the ITC indicated that it would be issuing a limited 10-year exclusion order prohibiting SK’s ability to import certain lithium-ion batteries into the United States. But special exemptions will be made for the company to import the components necessary for their production inside the U.S. and other parts intended for Ford’s F-150 EV program over the next four years. Additional allowances will be made for Volkswagen of America’s planned MEB electric vehicle lineup, though only for two years.

That seems to give sufficient leeway for Blue Oval to get the ball rolling on the all-electric pickup. But Farley took to social media on Thursday to announce that a settlement was the only way the program could continue.

“While we’re pleased the ITC ruling makes way for @Ford to bring to market our groundbreaking electric F-150, a voluntary settlement between these two suppliers is ultimately in the best interest of US manufacturers and workers,” he wrote in response to a Washington Post article about the case.

We’ve been repeatedly confused by how willing the automotive industry has been to let other companies have near-complete control over what is inarguably the most important and valuable component for electric vehicles. In fact, it wasn’t more than two years ago that German Chancellor Angela Merkel was chastising domestic automakers for allowing themselves to become so dependent upon China, Korea, and Japan. But Ford has previously claimed there’s nothing to be gained by building a battery factory, especially considering the swift way in which the industry is currently evolving. While that leaves the company open to losing ground to the handful of automakers that are building their own cells, Ford is hardly the only automaker taking this approach.

“The supply chain has ramped up since Elon [Musk] built his Gigafactory, and so there’s plenty there that does not warrant us to migrate our capital into owning our own factory,” Ford’s last CEO, Jim Hackett, suggested during last summer’s earnings call. “There’s no advantage in the ownership in terms of cost or sourcing.”

Perhaps Hackett couldn’t foresee Ford’s battery supplier losing a court case that would place limitations on its ability to import products into the United States.

Obviously, SK Innovation is displeased with the ITC’s decision. But it issued a reminder that the 60-day presidential review gave an opportunity for President Joe Biden to reverse the ruling. Considering how obsessed the administration appears to be with transitioning toward electric vehicles and moving away from fossil fuels, we suppose there’s a chance. But it wouldn’t be clear how it would benefit America more than having the nation build its own batteries. And wasn’t the Biden-Harris ticket promising an avalanche of new jobs in the energy sector? This seems like a golden opportunity to try and make good on that promise.

[Image: JL IMAGES/Shutterstock]

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21 Comments on “Ford CEO Asks Battery Suppliers to Stop Fighting...”


  • avatar
    DC Bruce

    Hacket’s comment about there being “no advantage in . . . sourcing” is puzzling to me. While it makes sense to outsource components outside of the core competence of the business (even transmissions), it seems to me that the core of any EV is the battery, since it determines range and performance. Sole-sourcing a battery just seems like a big risk to me. Of course, Farley has inherited the consequences of that decision.

    Elon Musk apparently agrees, since he’s producing batteries in-house for Tesla.

    Admittedly, this raise the cost of entry a lot; but it would seem to me that any legacy motor vehicle manufacturer which plans to get into EVs would also have to plan — in very short order — to get into batteries.

    • 0 avatar
      mcs

      Actually, Tesla is designing the batteries in-house, but production is in-house and outside with the other companies using Teslas technology.

      Toyota designed their battery in-house and so far seems to be working on manufacturing it in-house. Not even sure if they’ve worked out all of the issues for mass-producing it. One of the issues I remember is that their battery manufacturing process requires there to be zero moisture in the air. Toyota is getting ready to launch their EVs, but I don’t they are going to have their in-house battery at launch. I think they’re targetting 2023 to 2025 for the in-house battery. I still think the whole hydrogen thing was a smokescreen put up by Toyota in an attempt to throw off the rest of the industry. At the same time they were pushing hydrogen, a steady stream of battery patents was being filed.

  • avatar

    “And wasn’t the Biden-Harris ticket promising an avalanche of new jobs in the energy sector?”

    It is a fool’s errand. All jobs will be created in China. Miserables will get nothing but welfare check.

  • avatar
    schmitt trigger

    “no advantage in . . . sourcing”
    Corporate-speak translation to English:

    This doesn’t increase the short term stock value, therefore we are not interested.

  • avatar

    I told you that in 10 years Tesla will be bigger than Ford. That’s how.

    • 0 avatar
      ToolGuy

      Random completely unrelated history from 1987 – refer to the chart here:

      https://coursekey.com/walmart-real-time-data/

      (Our message to Kmart in 1987? ‘Relax, you’ve got this covered.’)

  • avatar
    amca

    The reason the automakers aren’t doing batteries themselves is that they don’t make batteries. That’s not a business you just waltz into – it’s not a simple thing to do well. The learning curve is high, and the automaker that didn’t get it 100% right right off the bat could face falling behind in the race to bring us all new EVs.

    And these work well for automakers. Each contract is so big that the automakers have lots of leverage to get a good partnership – and each of these deals is a joint venture to build and operate a HUGE business. It’s an instant billions of dollars a year business for the the battery manufacturers.

    It actually makes perfect sense that the manufacturers would bring in partners rather than trying to go it alone.

    • 0 avatar
      mcs

      “The reason the automakers aren’t doing batteries themselves…”

      They are doing their own batteries. Toyota is doing their own. So is Tesla. They both developed their own battery labs. Toyota’s battery r&d center is in Saitama Prefecture. Tesla’s is in Nova Scotia. Toyota is partnering with Idemitsu Kosan and Sumitomo Chemical for the electrolyte materials. Mark my words. Watch out for Toyota in the EV space. They may be the dominant player in 2025 to 2030.

      In the last half of this decade, the dominant auto companies will be the ones that developed their own battery technology. Toyota will be at the top. Tesla will be there and VW if their battery partner comes through. Hyundai/Kia (which have battery labs too) should be fine too with the Korean based battery manufacturers.

      Get used to new terms like Wh/kg which measures the gravimetric density of batteries, and Wh/l which measures volumetric density. Out of those numbers, I think Wh/kg is the most important and impacts the efficiency of the vehicles. With a more efficient vehicle, you’ll need less battery capacity for a given range. With less battery capacity needed, you lower both the cost and decrease the amount of time to fully charge for a given range. The Wh/kg number is an important number for all of these battery makers and designers. That’s the number that will make or break automakers. They’re really secretive about the Wh/kg numbers.

  • avatar
    SCE to AUX

    This is what they get for not being all in.

    On the plus side, this gives them plausible deniability when their EV sales falter.

    I believe this same case affects Hyundai, too. I was really looking forward to their next releases.

  • avatar
    EBFlex

    Little Jimbo is nervous. His fake electric truck will be impacted greatly like this.

    Lucky for him , if the fake EV F150 is anywhere near as bad as the Mockery, It won’t sell in enough numbers to matter.

  • avatar
    EBFlex

    Little Jimbo is nervous. His fake electric truck will be impacted greatly like this.

    Lucky for him , if the fake EV F150 is anywhere near as bad as the Mockery, It won’t sell in enough numbers to matter.

    • 0 avatar
      Art Vandelay

      Careful. If you say it a third time and in a steamed up mirror and write “Hackett” backwards in the fog the ghost of Hank the Deuce will come through the mirror and drop an FE block on your head.

      The internet is new and challenging I suppose.

      • 0 avatar
        conundrum

        Hackett isn’t CEO of Ford any more. You have the grand ego of Jim Farley there now, the man who made such a success of the Scion brand for Toyota, and a genius in his own mind.

      • 0 avatar
        ToolGuy

        “Hank the Deuce”

        It’s good to be the King:

        “In the Ford Motor Company’s executive dining room, Henry Ford II rarely ate anything but hamburgers. According to Lee Iacocca, Ford complained that his own personal chef at home couldn’t make a decent burger. In fact, no one made burgers as perfect as the ones at the executive dining room. Curious, Iacocca asked the establishment’s chef to show him what he did to make Ford so happy with his burgers. The chef went to the fridge, grabbed an inch-thick slab of New York strip steak, ran it through a grinder, patted up a patty and tossed it on the grill. “Amazing what you can cook up when you start with a five-dollar hunk of meat,” said the chef with a sly smile. (Though it would be more like a $25 hunk of meat today.)”

        https://www.foodwine.com/food/kgk/2011/kgk0911.html

  • avatar
    el scotto

    Most EV aren’t cheap, perhaps causing some jealousy from commenters and causing attempted derisive comments. EV are now getting cheap enough they can become the commuter beast in a two-car family. EV CARS have been covered and discussed at length on here. No one has expressed any comments on the “white paint work vehicle” armada. Delivery vans of all sizes and pick-ups will be EV’s true breakthrough. In a year or two we may have fleet managers commenting on here about their work fleets.

  • avatar
    el scotto

    Is it true that Stellantis’ total EV research is some guy in Turin rubbing two magnets together and three guys near Lyon wiring up a toy train transformer? Ok, I kid but not by much. The last and the lagging in EV efforts will bought by the Chinese. Include an outside shot of Ford becoming part of the VW group.

    • 0 avatar
      SCE to AUX

      Ha! Probably true.

      Stellantis paid their way out of CAFE problems by sending money to Tesla. To their credit (pun intended), doing so *is* cheaper than spending billions on an EV program that has a ‘maybe’ chance of success.

      Similarly, I imagine they’ll just partner with someone else to make a few EVs, or even rebadge them.

      No way they’re going all-in on EVs.

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