Ford negotiates with BYD to purchase batteries, plans include

# Source: Wall Street Insights

## Dong Jing

Ford is reportedly in advanced talks to procure batteries from BYD for some of its hybrid vehicle models. The options under discussion by both parties include shipping the batteries to Ford's factories outside the U.S. for production, though the deal has not yet been finalized. As Ford scales back its all-electric vehicle business and ramps up investment in hybrid models, the company is in urgent need of high-quality battery suppliers—a field where BYD boasts mature manufacturing capabilities.

Ford Motor Company is engaged in in-depth negotiations with BYD to establish a partnership. Under the proposed plan, the U.S. automaker will source batteries from the Chinese automotive giant for a portion of its hybrid vehicle lineup.

On January 15, people familiar with the matter revealed to *The Wall Street Journal* that the two sides are still deliberating on the specific cooperation model. One of the current proposals is for Ford to transport the batteries purchased from BYD to its manufacturing facilities outside the United States. Negotiations are still ongoing, and there remains uncertainty over whether the final deal will be concluded.

If the agreement is reached, Ford will team up with China's largest automotive company, which holds cutting-edge technology and cost advantages. Amid Ford's strategic shift away from all-electric vehicles and toward greater investment in hybrid models, the company is acutely in need of reliable high-quality battery suppliers, a segment where BYD possesses sophisticated manufacturing expertise.

Reports indicate that Ford announced last month that it would shift its strategic focus from all-electric vehicles to hybrid models, with the goal of making hybrid, plug-in hybrid, and all-electric vehicles account for approximately half of its global sales by 2030.

### BYD's Battery Production Capacity Continues to Expand

Long before emerging as one of the world's largest automakers, BYD had already built a robust battery manufacturing business, including batteries for hybrid vehicles.

The company currently produces most of its batteries in China, but it is expanding production capacity at overseas plants to tap into markets such as Southeast Asia, Europe, and Brazil. According to estimates from Bernstein Research, BYD's battery shipments surged 47% year-on-year to reach 286 gigawatt-hours last year.

BYD has previously manufactured commercial vehicle batteries at its bus factory in California, but it has not yet produced passenger vehicle batteries in the United States.

### Ford Accelerates Hybrid Vehicle Deployment

Ford is currently grappling with slowing demand for electric vehicles. Last month, the company stated that it would adjust its strategy, expecting to incur costs of up to $19.5 billion, primarily related to its electric vehicle business.

At the same time, Ford plans to expand its fuel-powered vehicle lineup and increase hybrid model options, which will require a larger supply of batteries suitable for hybrid vehicles.

Ford's hybrid vehicle sales have already shown growth momentum. In the fourth quarter of last year, the company's hybrid vehicle sales rose 18% year-on-year to approximately 55,000 units.

At this week's Detroit Auto Show, Ford CEO Jim Farley stated that the company has achieved success with the hybrid version of the F-150 and now aims to expand its offerings to other hybrid and extended-range electric vehicle models.

### Existing Foundation for Cooperation Between the Two Parties

This is not the first time Ford and BYD have explored cooperation.

In 2020, Ford began using BYD batteries in China for vehicles produced by its joint venture with state-owned automaker Changan Automobile. Several years later, BYD proposed supplying batteries for Ford vehicles sold in other markets.

Notably, a number of U.S. automakers have established partnerships with foreign battery manufacturers. General Motors and Ford have previously set up joint ventures with South Korean companies.

Ford is constructing a battery factory in Marshall, Michigan, which is planned to produce low-cost batteries using technology from Chinese battery manufacturer CATL. The plant is expected to commence operations this year, manufacturing batteries for Ford's upcoming all-electric pickup truck priced at $30,000.

### Risk Warning and Disclaimer

The market is risky, and investment requires caution. This article does not constitute personal investment advice, nor does it take into account the specific investment objectives, financial situations, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are in line with their specific circumstances. Any investment decisions made based on this article shall be at the user’s own risk.