Ford diversifies European battery strategy to navigate trade barriers

Ford will source batteries from at least three different locations for its forthcoming European electric vehicles as it finalizes a supply strategy that navigates post-Brexit trade agreements.

Ford in March promised to launch seven new electric vehicles in the region by 2024, including a version of its top-selling Puma small SUV and an electric Transit Custom midsize van.

In June, Ford announced it would also build new EVs in Valencia, Spain, by the end of the decade.

Cells for the electric vans would be supplied by a new battery plant in Turkey built in partnership with Korea’s SK On and due to start production in 2025 with a capacity of between 30 and 45 gigawatt hours.

The Turkey battery plant, however, cannot supply Ford’s Craiova facility for the production of the Puma EV starting 2024 without breaking rules of origin within the European’s Union post-Brexit trade agreement with the UK.

“We need to buy most of our batteries within Europe. Otherwise, we have to pay a duty,” Sue Slaughter, Ford’s head of supply chain sustainability strategy and former purchasing director of Ford of Europe, told Automotive News Europe.

Turkey’s position outside the EU mean batteries sourced there would likely drag the amount of locally sourced content for EVs assembled in the EU below the 55 percent threshold to satisfy UK and EU origin rules that take effect in 2027.

That would include cars and vans made at Ford’s plant in Craiova, Romania, and shipped to the UK, traditionally Ford’s biggest European market.

Instead, batteries for the Puma would be sourced from Ford’s existing cell supplier, LG Chem, which has a plant in Poland, Slaughter said. LG’s plant also makes batteries for the Mustang Mach E and newly launched e-Transit large electric van.

Meanwhile, the batteries for Ford’s new midsize crossover due to be assembled at its plant in Cologne, Germany, starting in 2023 would be sourced by the Volkswagen Group as part of its agreement to supply Ford the underlying MEB platform for the car.

Ford has also announced a second model on the same MEB platform for Cologne, without mentioning the body style.

The battery strategy for Ford’s new EVs to be built in Valencia later this decade is less clear. However, they would be built in Europe, Ford of Europe President Stuart Rowley said in June as part of the announcement.

“The reality is we would intend to source batteries for production for vehicles in Europe domestically in Europe,” Rowley said. “That is a necessity due to the rules of origin requirements for both the European Union and the UK.”

Ford wants to localize cell production in part to lower its CO2 output as part of its plan to become carbon neutral by 2035, including its Tier 1 suppliers, Slaughter said.

“Certainly, CO2 is becoming a bigger part of that decision for us,” she said.

New EVs built in Valencia would use a next-generation Ford-developed global electric architecture the company said, without being specific.

The news dealt a blow to Ford’s Saarlouis, Germany, plant, which has no replacement vehicle lined up after Ford ends production of the Focus compact there in 2025.

Ford sources batteries for the plug-in hybrid Kuga SUV currently built in Valencia from Samsung in Hungary. The batteries were subject a recall in 2020 due to the risk of them catching fire.

Ford CFO John Lawler said in June that profits on the Mustang Mach-E midsize SUV had been wiped out by rising commodity costs.

However, he said the company had made “significant learnings” from the car to take forward to its next generation of electric vehicles.