(Reuters) -Ford Motor Co on Monday unveiled a clutch of deals for the supply of battery material lithium, as the U.S. automaker aims to meet its target of 2-million electric vehicle production by 2026 and close the gap on market leader Tesla Inc.
North American automakers are racing to secure supplies of battery materials to boost EV output as demand surges for environment-friendly vehicles and to take advantage of tax credits offered by the U.S.
The deals announced on Monday also come when doubts linger on Wall Street about legacy automakers' ability to hit the lofty targets set for EV production.
Ford has said it would have a global capacity to build 600,000 EVs by the end of 2023. Meanwhile, rival General Motors Co's EV production at mid-decade could be capped as well, according to a forecast and analysis prepared for Reuters.
Albemarle Corp and Nemaska Lithium will supply lithium hydroxide, a primary ingredient in the cathode of lithium-ion batteries, over a period of five and 11 years, respectively, Ford said on Monday.
Lithium, a key component in most modern EV batteries, has a higher energy density, making it possible to keep batteries compact and have higher storage capacities, crucial to enable covering long distances between charging.
Privately held EnergySource Minerals will supply lithium hydroxide from the Imperial Valley, California site, which is expected to be operational in 2025, it said, while Compass Minerals will provide lithium carbonate.
Ford had earlier this year joined PT Vale Indonesia and China's Zhejiang Huayou Cobalt as their new partner in a $4.5 billion nickel processing plant in Indonesia.
The U.S. automaker on Monday also reaffirmed its full-year forecast of $9 billion to $11 billion of adjusted earnings before interest and taxes and about $6 billion in adjusted free cash flow.
Ford continues to expect its electric vehicle unit to lose $3 billion this year.
The five-year agreement with Albemarle to supply more than 100,000 metric tons of battery-grade lithium hydroxide will power about 3 million future Ford EV batteries.
Nemaska Lithium is equally owned by Investissement Québec, the economic development agency of the Québec government, and Livent. Ford will be its first customer.
Shares of Ford, which is hosting an investor event later in the day, edged up about 1% before the bell.
(Reporting by Abhijith Ganapavaram and Shivansh Tiwary in Bengaluru; Editing by Sriraj Kalluvila)
