BlueOvalSK -- May 20, 2021

Updates

Later, 9:56 p.m. CT: I recently saw the new Mustang EV -- whatever it's called -- Mach E or something  -- oh, there it is, 2021 Ford Mustang Mach-E SUV. After seeing it in the wild, and then looking at a 30-minute YouTube video on the Mach-E, my initial thoughts were overall "neutral" with regard to the Mustang EV, but now that I've had some time to think about it, a few further thoughts:

• Ford will sell every Mustang EV it builds;
• demand will outstrip supply; a lot of money will be left on the table due to supply constraints;
• see today's news re: Ford and shutting down plants across the nation;
  
• the margins will be very, very slim:
• the design will change significantly over time:
• automobile purists and aficionados -- if there are such things -- will be incredibly disappointed
• more on that later when I have more time to write
• Ford hopes to offset slim margins on the vehicle by becoming the #1 battery maker in the world

Later, 9:50 p.m. CT: My reply to the reader who sent me the article below regarding BlueOvalSK.

There are so many story lines here but due to family commitments my time is severely limited and thus my limited comments. 

Four thoughts on this entire industry, not just Ford.

• the strategic decisions these companies are making will make or break many (most?) of these companies. Strategic: 20+ years.
• margins are going to be lousy on EVs. Margins on ICE vehicles are going to be huge, unless state and national governments "determine" winners and losers, which they very well might.
• if the grid doesn't move step-in-step with the EV industry, everyone is "hoping" it -- the infrastructure -- will work. I've not seen anything that suggests the infrastructure will be there in lockstep with the EV rollout.
• it's gonna take a lot of natural gas to make all that electricity. I'm lovin' it. 

Japan is already preparing for electricity shortages this summer and there is almost no EV penetration in Japan.

Texas is warning about electricity shortages this summer and there's even less EV penetration in Texas than there is in Japan. 

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Original Post

Due to family commitments for the next ten days, I won't be able to spend much time on these stories or the blog in general. 

A reader sent me this article; it will end up behind a paywall if it already isn't. But the story will be easy to find elsewhere. 

Ford is forming a joint venture that will build two North American factories to make batteries for roughly 600,000 electric vehicles per year by the middle of this decade.

The deal with battery maker SK Innovation of Korea, announced Thursday, sets up a potential confrontation between the companies and the United Auto Workers, which issued a statement saying Ford has a moral obligation to make sure plant workers are paid union wages.

The UAW and President Joe Biden have advocated for union jobs in new factories as the country transitions from gasoline-burning vehicles to those powered by electricity. The issue almost certainly will be part of negotiations on a new UAW national contract in 2023.

The joint venture called BlueOvalSK is the start of Ford’s plan to vertically integrate key parts of the electric vehicle supply chain. The companies say they have signed a memorandum of understanding, but details on the ownership structure and factory locations have yet to be worked out.

Company executives wouldn’t say whether jobs at the factories would be union. Ford North America Chief Operating Officer Lisa Drake said the companies are still in the memorandum of understanding phase. “We don’t have our labor strategy defined yet. That will be determined by the joint venture itself once that entity is set up” this summer, she said.

SK Innovation already has a U.S. battery factory in Commerce, Georgia, and says it’s expanding production in Europe and China. It plans to be one of the top three electric vehicle battery suppliers in the world by 2025, according to a statement. The company has a contract with Ford to make batteries for a new electric F-150 pickup truck, which is due in showrooms by next spring. Ford’s F-Series pickups are the top-selling vehicles in the U.S.

The UAW has been vocal as General Motors and now Ford have announced plans for joint ventures with battery companies to supply what’s expected to be a growing electric vehicle market. Biden plans to spend $15 billion to build a half-million electric vehicle charging stations by 2030 as well as offer billions in unspecified tax credits and rebates to cut the cost of the vehicles and make them more appealing to buyers.

The strategy is a key component of his plan to fight climate change by cutting U.S. greenhouse gas emissions at least in half by 2030, as well as create “good-paying union jobs” in a clean energy economy.

But the union, which represents about 150,000 U.S. workers at Ford, General Motors and Stellantis (formerly Fiat Chrysler), fears that automakers will try to use joint ventures to keep the plants outside of the national union contracts with the three companies.