Ford Motor Co. and South Korea’s SK Innovation Co. plan to spend $11.4 billion to construct three battery factories and an assembly plant for electric F-Series pickup trucks in Tennessee and Kentucky, the biggest investment in the U.S. automaker’s history.
The project will create two vast sites to produce electric vehicles and the batteries to power them, employing nearly 11,000 workers, the companies said Monday. Ford is spending $7 billion, while battery partner SK is kicking in $4.4 billion. They begin to come online in 2025.
The projects are part of Ford’s plan to invest $30 billion in electric vehicles by 2025, become a player in a market dominated by Tesla Inc. and challenge General Motors Co.’s image as leading the legacy automakers. Since becoming Ford’s boss a year ago, Chief Executive Officer Jim Farley has accelerated efforts to make the switch to an all-electric future, earning a plug from President Joe Biden on the electric F-150 and striking a battery joint venture with SK.
Ford shares rose 3.1% in premarket trading Tuesday to $14.60 as of 9 a.m. in New York. The stock was up 61% this year as of the close Monday.
The Tennessee site to be known as Blue Oval City will occupy six square miles, making it three times the size of the historic Rouge Complex Henry Ford built in Michigan a century ago. It will include a battery plant employing about 2,500 workers and an assembly plant with 3,300 employees that will produce an electric version of Ford’s larger F-Series pickup, its most profitable product.
In Kentucky, where Ford already has truck and SUV factories, the automaker and SK will construct two battery plants employing about 5,000 workers. The three battery factories will have the capacity to churn out power sources for more than 1 million electric vehicles a year, Ford said.
The big investment follows Ford’s move this month to double production at the Michigan factory building the electric F-150 Lightning pickup going on sale next year. The company says it already has 150,000 reservations for the plug-in pickup. Its battery powered Mustang Mach-E also has begun outselling the gasoline-fueled version of the pony car.
“The early results would say there is huge demand for electrified vehicles,” Kumar Galhotra, Ford’s president of the Americas and international markets, said in an interview. “The level of this investment demonstrates how confident we are.”
The Stanton, Tennessee, F-Series factory will be the first all-new assembly plant Ford has built since 1969, the company said. The United Auto Workers won’t automatically represent the new workers and will have to organize employees of the assembly and battery plants in both states, which have right-to-work laws that labor groups have seen as hostile.
The UAW has been concerned that the transition to electric vehicles could cost jobs. A study by AlixPartners found it takes 40% less labor to assemble an electric motor and battery compared with a traditional internal combustion engine.
“The UAW looks forward to continuing our long-time partnership with Ford as consumers transition to make electric vehicles in the right way,” UAW President Ray Curry said in a statement. “We look forward to reaching out and helping develop this new workforce.”
Galhotra said Ford has a “fantastic relationship” with the UAW, but it will be up to the new workers as to decide whether to join the union.
“We have to let the employees decide,” he said.
To land their two largest ever economic development projects, Tennessee and Kentucky provided incentives to Ford and SK. Tennessee is offering $500 million, pending a special session of the state legislature to approve the deal. Kentucky is providing a $250 million forgivable loan, $36 million in training funds, infrastructure improvements and a 1,551-acre site in Glendale, south of Louisville.
Farley, along with Ford Executive Chairman Bill Ford and top executives of Seoul-based SK Innovation, will visit both states Tuesday for official announcements.
“This is a transformative moment where Ford will lead America’s transition to electric vehicles,” Ford, the great grandson of Henry Ford, said in a statement.
Since Farley announced plans in May to boost Ford’s EV spending by one third, the company has grown more optimistic about how quickly the market will develop for battery powered vehicles.
“We’re building in more upside based on our experience with the Mach-E and the F-150 Lightning,” Lisa Drake, Ford’s chief operating officer in North America, said in a briefing with reporters Monday.
When Ford first announced the the SK partnership in May, the plan was to build two U.S. battery plants, but that has now increased to three. Those plants, along with a battery plant in Georgia that will supply the F-150 Lightning, give Ford 141 gigawatt hours of battery supply, Galhotra said. That meets Ford’s target for demand in North America for now, which is for 40% of its sales to be electric by 2030.
“We’re in the early stages,” Galhotra said. “We’ll see how this develops. We might need more.”
– By Keith Naughton (Bloomberg)