Ford joined with two other companies in a $4.5 billion deal for a nickel processing plant in Indonesia, the U.S. automaker’s first investment in the country.
It’s not clear how much Ford is investing in the project.
The Michigan-based car maker is partnering with PT Vale Indonesia and China’s Zhejiang Huayou Cobalt in the venture. Ford, like many other automakers, has been working diligently to secure the materials and production facilities needed to meet its electrification goals.
In Ford’s case, officials are targeting a run rate of 600,000 EVs by the end of this year and 2 million vehicles annually by the end of 2026. By securing contracts now, they can get a better handle on costs, which is critical as automakers look to bring the down the price of EVs, which is currently about $17,000 higher than the average price of a new mainstream vehicle with an internal combustion engine.
“This framework gives Ford direct control to source the nickel we need — in one of the industry’s lowest-cost ways — and allows us to ensure the nickel is mined in line with our company’s sustainability targets, setting the right ESG standards as we scale,” said Lisa Drake, vice president for Ford Model e EV industrialization in a statement. “Working this way puts Ford in a position to help make EVs more accessible for millions and to do it in a way that helps better protect people and the planet.”
Why Indonesia?
Home to the world’s biggest nickel reserves, Indonesia’s been pushing to advance its ability to serve a variety of industries that rely on nickel. This push has a focus on batteries and EVs. The proposed high-pressure acid leaching (HPAL) plant will be located in Pomalaa in Southeast Sulawesi, where Vale operates a nickel mine, according to Reuters.
The plant’s construction, started by Vale and Huayou, began in November. It’s expected to commence operations in 2026. Febriany Eddy, chief executive of Vale Indonesia, told Reuters the deal is unique in bringing the U.S. automaker into an upstream nickel business.
Vale has a 30% stake with Huayou and Ford owning the rest, although that split was not revealed.
“Ford can help ensure that the nickel that we use in electric vehicle batteries is mined, produced within the same ESG standards as part of our business around the world,” Christopher Smith, Ford’s chief government affairs officer, said at the signing ceremony.
Batteries are key
With the passage of the Inflation Reduction Act came the $7,500 EV tax credits the Biden administration and most Democrats claim are crucial to the success of electric vehicles. However, those incentives come with restrictions about how much of the vehicles and the batteries must be produced with materials in the U.S.
Securing a plant outside the U.S. for battery materials means it can more easily supply its EV operations outside the United States. Ford’s been working to ensure it meets the “local” mandates in the IRA. In February it announced plans for a $3.5 billion battery plant in western Michigan.
The project pairs Ford with China’s CATL, one of the world’s largest producers of EV batteries.
The new facility will be located on 1,900 acres and employ 2,500 people at full production — most being Ford employees.
Through the new Inflation Reduction Act, producing EV batteries in the U.S. will net as much as $45/kWh credit due, in part, to the prices of raw materials with LFP being cheaper than the NCM cells, officials said during press briefing earlier today.
The lower costs of LFP batteries could come down to about $100/kWh when domestic production begins, then if you add the $45/kWh credits through the IRA, it drops below $60/kWh the range where experts claim parity with internal combustion power begins.