Ford CEO says US should boost battery production to avoid a future supply-chain crises

Tim Levin
·2 min read
ford factory
The chip shortage has impacted production of Ford's top-selling F-150 pickup. Associated Press
  • The US needs to grow its battery production, Ford CEO Jim Farley said at a conference Wednesday.

  • Farley said that's crucial for avoiding the next global supply-chain crisis.

  • A worldwide shortage of semiconductor chips has hobbled the recovering auto industry.

  • Visit the Business section of Insider for more stories.

Ford CEO Jim Farley called on the US government to bring battery production closer to home if it wants to avoid another shortage of critical auto parts.

"We need to bring large-scale battery production to the US, and we'll be talking to the government about that," the Ford boss said during the Wolfe Research Auto Conference on Wednesday, per Bloomberg. "We can't go through what we're doing with chips right now in Taiwan. It's just too important."

The comments came as a worldwide shortage of semiconductor chips has forced automakers around the globe to cut shifts and halt production at entire plants, slowing down the recovery of an industry that already faced limited production last year due to the pandemic. The chips are needed for a variety of critical vehicle systems, including infotainment screens and engine-control units.

The impact of the drop in supply is also rippling across the smartphone, PC, and game-console industries.

In early February, Ford announced it would temporarily reduce shifts at two plants that build its best-selling model, the lucrative F-150 pickup. During Ford's fourth-quarter earnings call with investors, CFO John Lawler said the supply-chain disruption could diminish first-quarter 2021 production by up to 20% and cut the company's 2021 earnings by up to $2.5 billion.

Fellow Detroit carmaker General Motors issued a similar prognosis, estimating in its 2021 guidance that the shortage could cut earnings by $1.5 billion to $2 billion. GM said the issue would not affect its electric-vehicle initiatives or production of its most popular, high-margin SUVs and pickups.

Tesla is stopping production of the Model 3 sedan at its Fremont, California, plant for two weeks, Bloomberg reported Thursday. Some industry watchers have theorized that the chip shortage is to blame for the disruption.

"We believe this shutdown is more around chip shortages (and not demand driven) which continues to plague GM and other automakers in the near-term, although it appears improvement from a chip perspective is on the horizon for Tesla and others," Daniel Ives, an analyst at Wedbush Securities, said in a Thursday note.

Amid pressure from lawmakers and industry leaders, President Joe Biden signed an executive order on Wednesday aimed at reviewing US supply chains of several goods, including batteries and semiconductor chips.

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