Ford plans to make electric car batteries in Kentucky. Will suppliers follow?
Marcus Green, Oct 17, 2021 Updated Oct 17, 2021
The "Glendale Megasite" is located off I-65 south of Elizabethtown. (WDRB Photo)
LOUISVILLE, Ky. (WDRB) -- Inside a squat brick building near Cardinal Stadium, Mahendra Sunkara and his team are exploring an increasingly 21st-century question: How can technology that harnesses renewable energy move from the laboratory to the real world?
Among its projects, the Conn Center for Renewable Energy Research is working to develop new materials for lithium-ion batteries. These are the types of batteries that Ford Motor Co. and South Korean partner SK Innovation plan to start making by 2025 at two plants in Hardin County, a key part of Ford’s goal of producing more electric vehicles.
Sunkara, the center’s director, believes University of Louisville researchers have a role to play.
“There's so many supply chain items that we can actually provide for these things, both in terms of electronics, power electronics, battery packs,” he said, standing in a lab at the center’s research garage on Floyd Street. “More than just Ford Motor Company, I think more things will come out as ancillary industries.”
It's that kind of potential boost that state officials and others hope will happen as a result of the automaker’s announcement last month that it was choosing Kentucky for the factories. Landing the plants has redefined the state’s place in the small but rapidly growing world of electric vehicle assembly and production.
Ford expects its $5.8 billion investment at the BlueOval SK Battery Park in Glendale to create 5,000 jobs. Those figures don’t include construction jobs or other economic impacts nor do they take into account other businesses that could locate nearby.
The University of Louisville's Conn Center for Renewable Energy Research (WDRB Photo)
The sheer size of Ford’s planned investment is a strong signal of the company’s commitment to electric cars and trucks, and the factories are likely to be a big employer in the region, said economist Michael Clark, director of the University of Kentucky’s Center for Business and Economic Research.
But he cautions that there still is “a lot of uncertainty with electric vehicles going forward,” such as the types of public charging stations needed for widespread use and whether plug-in cars will ultimately make the gains that are projected.
“We really have an infrastructure in the United States that's built around the gas-powered engine,” Clark said. “We don't really have an infrastructure that supports electric vehicles.”
Ford, however, is setting ambitious goals to change that. In unveiling its plans for the Kentucky battery plants and a similar campus outside Memphis, the company said it expects 40-50% of its vehicles worldwide to be fully electric by 2030.
Sales of electric and hybrid vehicles are on pace to more than double this year to 6.2 million worldwide, according to analysts at S&P Global. That would represent nearly 9% of the overall passenger vehicle market, compared with less than 3% in 2019, their data show.
To meet increasing demand for those vehicles, battery makers have announced more than 80 factories across the world for lithium-ion cells and batteries, according to a report published this year by Ultima Media, a company that follows the auto industry. The U.S. has “lagged behind.”
With Kentucky in line for two manufacturing plants, local and state officials also are hoping to attract companies that can furnish materials used in making those batteries.
The state’s four auto manufacturing plants — Ford’s two Louisville factories, General Motors’ Corvette plant in Bowling Green and Toyota’s Georgetown plant — are served by a network of regional parts suppliers. In all, Kentucky has 549 automotive-related facilities that employ more than 103,000 full-time workers, according to state data.
Gov. Andy Beshear, whose administration negotiated the Ford deal, said recently that he wants Kentucky to take the lead in attracting suppliers for electric cars and trucks.
“Right now, there isn’t an electric vehicle battery supply chain in the United States – so we’re going to build it right here in the commonwealth,” Beshear said in a recent op-ed. “We’re already hearing from potential electric vehicle suppliers who are showing interest in coming to Kentucky, creating even more jobs throughout our booming Auto Alley.”
In an interview last week, Beshear said state officials expect to get interest from companies that make parts for electric vehicles as well as those that produce components for the batteries to be made in Hardin County.
“At a time when transportation costs are significant, proximity is so important,” he said. “So we expect not just to be competitive but to have the advantage in locating what we hope are in excess of tens of thousands of jobs across Kentucky to supply” the battery park.
Gov. Andy Beshear announces Ford to build $5.8 billion vehicle battery plant in Kentucky.
Ford did not respond to questions for this story, including about its potential supplier network for the Hardin County plants.
The Elizabethtown-Hardin County Industrial Foundation has created a web portal for supplier and other inquiries at the Glendale site. Ford receives those submissions, said Rick Games, the foundation’s president and chief operating officer.
“It'll obviously escalate,” Games said. “We see that here when we get a new announcement in our park. On something even on a smaller scale, you have a lot of people that have interest. So we kind of got on this quickly, anticipating that that would be the case.”
Supply chains for electric vehicles made in the U.S. are expected to be international at first, simply because some materials won’t be available locally, said Bernard Swiecki, research director at the Ann Arbor, Michigan-based Center for Automotive Research.
If the transition to electric cars moves slowly, he said, it’s possible that some of the suppliers that open in the U.S. won’t have enough business to justify staying open. In turn, that could lead to automakers choosing to return to importing parts until the industry grows big enough to support those domestic plants.
That scenario poses a risk, Swiecki said.
“Because supply chains have a lot of inertia, you know once something goes global, trying to bring it back to domestic is much harder,” he said. “So I'm starting to think that maybe we need to accelerate the living daylights out of this transition so that it's more viable to produce things domestically right away.”
In Berea, Kentucky, Hitachi Astemo Americas, Inc. is planning to make motors for electric vehicles at an existing plant that is being renovated. Hitachi did not respond to a request for information about its project.
But Berea Mayor Bruce Fraley said when manufacturing begins in late 2022 or early 2023, the plant will supply motors for Honda plug-in cars assembled in Ohio. He believes his city’s project and others related to electric vehicle put the region in a competitive position.
“The entire central Kentucky region in particular is poised to capitalize on that — on supplier and spinoffs of those particular industries that will be manufacturing electric vehicle components,” he said.
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