Ford’s $11.4 billion investment in EV production

Brian Sozzi and Julie Hyman break down the news of Ford and SK innovation’s plans to invest $11.4 billion to build an electric F-150 assembly and battery plant in the U.S. and what this investment could mean for the EV industry race moving forward.

Video transcript

BRIAN SOZZI: Ford isn't playing around with its transition to electric cars. Along with SK innovation, the two will invest $11.4 billion to build new EV and battery manufacturing plants in the United States. Major investment here by Ford. Now, I caught up with Ford CEO, Jim Farley, ahead of today's show. We talked a lot about why they're making this investment. And also to the chip supply shortage, telling me that he is seeing improving supply of chips compared to the second quarter. But he sees it as an issue continuing to 2022. And on the topic of these major new investments, interesting what he told me on why it is important to build these plants, get that battery production back into America.

JIM FARLEY: Yes, all through Asia. Japan, South Korea, and China. And they made the bet on the technology, whether it's lithium ion, NCM, or even iron phosphate, you know they have the lead. Now in America, we have a lot of cool companies that are doing solid state. But we missed on that chemistry change. And the Asian countries and companies have the lead. That's why we have to partner with companies like SK. They have great quality. We've bought batteries from everyone. We think this is the right company to partner with. But we have to learn how to do this ourselves in America.

BRIAN SOZZI: And Julie, who controls the battery supply chain is a big problem for a lot of EV makers. It's essentially dominated, as Jim mentioned, by Asia. Essentially, five or six companies, Panasonic, Samsung, you name it. So it's important the likes of Ford, and of course, General Motors, with these big pushes into electric vehicles. And they're significant. Ford alone expects 50% of its global volume to come from electric vehicles by 2030. They have to start making batteries in this country.

JULIE HYMAN: You know, it's really interesting too, thinking about the geography of where they're doing it. Isn't this plant going to be in Tennessee? Or a big part of their investment is going to be in Tennessee. So it's interesting, this sort of moving center, if you will, of the auto business in that way. They have a long way to go, Brian, it feels like. I mean, I was just looking at the facts this morning. Only 3% of vehicle sales in this country are currently electric vehicles. So it's very interesting to me, this push, this investment, this planning that all these companies are making. They're early, right? I mean, they're obviously trying to prepare for a big shift, but I wonder how quickly that shift is going to happen as it starts to gain steam. They've got those 150,000 preorders for the lightning, or they're non-binding orders, let's call them. You know, but 150, we'll see how many of those actually are real, how many people take delivery of those. But I'm really curious to see how quickly all these numbers are going to start to ramp up in terms of actual deliveries.

BRIAN SOZZI: It's a good point, Julie. They are coming in a big way. I think over the next five years, you're going to see just an influx of these electric vehicles, not just from Ford. Certainly, their numbers will pick up when they start shipping the all electric f-150 Lightning next year. The mach-e has gotten a critical acclaim. Very strong orders there as well. And then, of course General Motors. I believe they're trying to get out 30 new electric vehicle models by 2025. So it's just fascinating to see how these auto giants have really ramped things up here to take on the likes of Tesla, Lucid, and you name it. But overall again, Ford shares right now up a lot in the pre market. The top trending ticker right now on the Yahoo Finance platform, and that is Ford.