Ford’s Lithium Play

On May 22, 2023, the giant automaker Ford announced deals with five more lithium mining companies.

That brings their total to six. Ford’s electric vehicles are the second most popular in the U.S. after Tesla.

In order to qualify for the whole EV tax credit in the Inflation Reduction Act, lithium must come from the U.S. or a country with a free trade agreement with the U.S. The key part of Ford’s deals is that the lithium supply will come from countries that qualify for the federal tax credits.

The giant carmaker now has agreements in place with:

• Nemaska Lithium
• Ioneer Ltd.
• EnergySource Minerals
• Compass Minerals
• Albemarle
• Sociedad Quimica y Minera de Chile (SQM)

The lithium will feed its BlueOvalSK battery venture in Kentucky. BlueOvalSK is a joint venture with SK Innovation, a South Korean battery manufacturer. That followed Tesla’s lead. Tesla broke ground on its lithium refinery in Texas, earlier this year.

Ford set a goal of producing two million EVs per year by the end of 2026. And it plans to be profitable. That hasn’t happened yet. The company announced that it forecast a $3.0 billion loss on its EV segment in 2023. That’s on top of the $3.0 billion losses it already booked.

Ford looks at those losses as an investment. And the company itself remained profitable. Operating income soared from its low of $4.2 billion in 2020 to $12.8 billion in 2022. That indicates the company is healthy, even as it spends money developing its EV arm.

And the electric vehicles remain popular. In January, 7.1% of the cars sold in the U.S. were all electric. That’s a whopping 74% increase from last January. And it’s partially due to the $7,500 EV tax credit.

That’s why Ford and Tesla are busy securing lithium supplies right now. Without the right metal supplies, many EVs won’t qualify for the whole subsidy. The car makers whose vehicles qualify for the whole subsidy will capture the most buyers.

Ford plans to be among the leaders. Their financial market guidance says that they expect to go from a 40% loss on EVs in 2022 to an 8% profit by 2026.

Good Investing,

Matt Badiali

Numbers to Know

1817

Lithium was discovered by Johan Arfvedson in 1817 in Stockholm, Sweden. Lithium is believed to be one of only three elements – the others are hydrogen and helium – produced in significant quantities by the Big Bang. (Chemicool)

6

There are 6 different types of Lithium batteries, They are at the center of the clean energy transition. Check out the use and the pros and cons of each here. (Visual Capitalist)

10 Times

Battery companies and automakers are scrambling to scale up battery production. The latest projections from BNEF estimate that US demand for batteries in 2030 will be 10 times greater than demand today. (Tech Brew)

What’s New in Sustainable Investing

Accenture Announces Intent to Acquire Green Domus to Expand Sustainability Services Capabilities

Accenture (NYSE: ACN) has announced its intent to acquire Green Domus Desenvolvimento Sustentável LTDA, a leading Brazil-based sustainability consultancy with experience helping clients design and implement a range of sustainability services with a focus on measurable decarbonization strategies. (Accenture

National Blueprint for Lithium

The National Blueprint for Lithium Batteries was developed by the Federal Consortium for Advanced Batteries to help guide investments to develop a domestic lithium-battery manufacturing. (FCAB)

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