Ford mentioned Monday it’s investing $3.5 billion to construct a manufacturing unit in Michigan that may make cheaper lithium iron phosphate batteries for its rising portfolio of electrical automobiles.

The manufacturing unit, which might be situated in Marshall, Michigan, is not going to make nickel cobalt manganese (NCM), a expertise that it’s in its present EVs. Ford mentioned it’s working with Chinese language firm Up to date Amperex Expertise Co, referred to as CATL, confirming earlier protection. Beneath the association, Ford’s wholly owned subsidiary would manufacture the battery cells utilizing LFP battery cell data and providers supplied by CATL.

“We’re dedicated to main the electrical automobile revolution in America, and which means investing within the expertise and jobs that may preserve us on the chopping fringe of this world transformation in our business,” mentioned  Ford govt chair Invoice Ford mentioned in a press release. “I’m additionally proud that we selected our house state of Michigan for this important battery manufacturing hub.”

The $3.5 billion manufacturing unit is a part of Ford’s plan to make investments greater than $50 billion in electrical automobiles globally by 2026. Ford mentioned it plans o ship an annual run fee of 600,000 electrical automobiles globally by the tip of this yr and a couple of million globally by the tip of 2026.

The manufacturing unit, referred to as BlueOval Battery Park Michigan, will initially make use of 2,500 staff, in response to the corporate. Manufacturing is anticipated to start in 2026. Ford could have the choice to additional develop its battery capability plant.

Ford mentioned it’s including the LFP batteries to its lineup this spring, beginning with the Mustang Mach-E, CEO Jim Farley mentioned throughout a press convention Monday. Ford mentioned final summer time that CATL would provide LFP battery packs for the Mach-E SUVs in North America beginning in 2023 adopted by F-150 Lightning pickup vehicles in early 2024.

Ford’s choice to fabricate LFP batteries in america is a part of a pattern amongst automakers to undertake this an older, cheaper and safer expertise. Tesla, as an illustration, already makes use of LFP batteries within the EVs it makes and sells in China.

China has owned the LFP marketplace for almost a decade as a result of an settlement with a consortium of universities within the U.S. and Canada that maintain patents on the expertise. However that’s poised to vary as entry to patents open up and the price of battery supplies rise.

Newer battery chemistries like nickel-manganese-cobalt (NMC) and nickel-cobalt-aluminum (NCA) get pleasure from larger power density that improves the vary of their batteries. Nevertheless, LFP doesn’t use scarce uncooked supplies like cobalt and nickel, making them cheaper, and are much less more likely to catch hearth. These perks have develop into extra interesting to automakers as search to supply extra inexpensive EVs, whereas sustaining and even enhancing revenue margins.

Correction: Ford’s new $3.5 billion manufacturing unit in Michigan will solely manufacture LFP batteries, not nickel cobalt manganese (NCM) and LFP batteries.