If you were to look under the hood of any internal combustion engine vehicle you would see a number of brands ensuring the engine runs well. Most of the parts likely have a generic or inhouse ability to make, but many manufacturers including car companies outsource the parts to other companies and the manufacturer puts the parts in correctly. As the car companies evolve from internal combustion engines to electric vehicles, the brand names will and are changing. This means over time, but not tomorrow, the companies that make parts for the internal combustion engine will make less or have to switch to electric vehicle parts. Sometimes it is easier for the manufacturers to find new partners in their manufacturing process.
In an article by Joseph White and Ben Klayman of Reuters, Ford announced it will import lower cost lithium iron batteries (LFP) for its trucks and SUVs from Chinese battery maker CATL.
Ford VP Lisa Drake said by 2026 the batteries should be made in the US, for now they will be made in China.
Ford’s decision to use lithium iron batteries in its best selling North American EV’s is the latest sign that lithium iron’s lower cost is worth the tradeoff in range.
Tesla is offering LFP batteries in its lower priced Model 3. Truck and van maker Rivian is using LFP batteries.
Ford is in talks with the big mining giants of Rio Tinto, Vale, Huayou Cobalt and BHP to secure lithium and nickel for the batteries.
Linking to dividend paying stocks, one of the aspects of being a successful company is making the transition to the new standards. If you remember video cassettes and the technologies were beta or VHS. One became a standard and sold billions of units, one died away until CDs changed the market. Picking the company that becomes the standard is the key, but what becomes standard is seemingly only obvious in retrospective. When companies particularly manufacturing companies announce their new partners you have to evaluate is that good?
There are more questions than answers, till the next time – to raising questions.