Jim Farley, the chief executive officer (CEO) of Ford Motors is calling for the US to begin production of batteries in light of the upcoming surge in electric vehicles and prevent supply chain disruptions like the semiconductor shortage that has forced US auto factories to idle.
The global semiconductor chips shortage has set the auto industry back causing a loss in production that followed the recent recovery from the COVID-19 pandemic. The predicament may cause automotive earnings to reduce by an estimated one-third at Ford and General Motors, according to media reports.
Per reports, Farley suggested that the US should cut back its dependence on Asian-produced batteries to avoid similar crises and that large-scale battery production will aid the country as it scrambles to meet chip requirements from Taiwan.
Much of the global chip supply that is needed by automakers is derived from the Taiwan Semiconductor Manufacturing Company that has toiled to keep up with the unforeseen high demand.
The CEO’s comments come alongside President Biden’s executive order to review and address vulnerabilities in the automotive supply chain, which includes semiconductors and batteries. The goal is to strengthen the US supply chain to be prepared in a crisis so that the country may increase its production or build surge capacity that can be accessible in an emergency.
Further talks on economic recovery focusing on the automotive industry were held by Secretary of Transportation Pete Buttigieg, National Economic Council Director Brian Deese, and National Climate Advisor Gina McCarthy who met with over 12 automotive industry manufacturers on Tuesday.
The Ford spokesperson plans to hold discussions with the government on the proposed idea according to reports.
Ford indicated its battery supplier for the upcoming electric F-150, South Korea’s SK Innovation recently lost an intellectual-property case concerning a rival company, LG Chem. SK has been banned by the International Trade Commission from trading batteries to the US for 10 years, however, it may trade components for the batteries over the next four years, that power the plug-in F-150 set to arrive in 2022.
A Ford spokesperson also said the US needs independent battery production to settle supply and labor issues that may add risk to the electric vehicle’s rollout over the next 10 years. Ford plans to spend $22bn on electric vehicles through 2025.