Ford Ion Park: Vertical Integration for Batteries

Ford Ion Park: Vertical Integration for Batteries

Ford is launching a new battery development center called Ford Ion Park in Southeast Michigan.  The center’s purpose is to conduct research on building battery cells for electric cars that are long lasting, quick to charge, and sustainable for the environment.

By preparing to make the batteries in-house, Ford will be less dependent on overseas suppliers and stay competitive with other car makers such as Tesla, Volkswagen, and General Motors.


Video Spotlight: 


This post is based on The Verge article, Ford takes its first step toward producing its own electric car batteries, by Andrew J. Hawkins, April 27, 2021; the Battery Technology article, Ford Launches $185 Million Ion Park Battery R&D Center of Excellence, by Dan Carney, May 11, 2021; the Ford press release, Ford Commits to Manufacturing Batteries, to Form New Joint Venture with SK Innovation to Scale NA Battery Deliveries, May 20, 2021; and the YouTube videos in the Spotlight. Image source: Jenson/Shutterstock

Discussion Questions:

1. What are the factors that Ford considered in deciding to develop batteries for electric vehicles in-house?

Guidance: The factors include expertise, quality, demand, cost savings, and risk reduction.  Ford wants to develop the expertise and competency of making batteries for electric vehicles (EVs) in-house to meet the quality and environmental sustainability standards the company desires.  The move also allows Ford to develop its own process of making the new battery cost effectively to meet growing EV demand, reducing the risk of sourcing batteries overseas such as import bans and trade secret disputes.

2.  How does Ford’s decision to develop batteries for electric vehicles in-house enhance its capacity planning?

Guidance: Being able to make batteries for electric vehicles (EVs) in-house will give Ford the flexibility to build its own battery cells for EVs instead of relying entirely on overseas suppliers.  It also allows Ford to increase the capacity required to mitigate the bottleneck operation of having enough batteries to meet the growing demand for EVs.

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