We’re encouraged by the slew of electric-vehicle announcements issued Thursday morning by Ford Motor (F), bolstering our long-term view that the Blue Oval will be an EV leader under the tutelage of CEO Jim Farley. The news The most important developments Ford detailed are about securing EV batteries. Ford said it has 100% of the battery supplies that are necessary to meet its goal of 600,000 autos globally in 2023 . Ford also said it’s working with CATL , a China-based battery giant, to meet its targeted production rate of 2 million EVs in 2026. The automaker said it already has sourced 70% of the battery cells required to “support” its 2026 EV goals. The details We’ve known about Ford’s goal of making 600,000 EVs next year since late 2021 , but nevertheless, it is ambitious and loftier than the company had initially planned. Ford says it is simply responding to stronger-than-expected demand for its growing lineup of EVs — a good problem to have. That’s what makes Thursday’s battery announcements particularly noteworthy. Wall Street has generally viewed splashy EV plans from Ford, General Motors (GM) and other automakers positively — but the more of them that were made, especially from some of the unprofitable EV makers that recently became public and have no manufacturing history , the more questions investors and analysts had about the likelihood every company could reach their production targets. The caution largely centered on capacity constraints, specifically on the raw materials that go into batteries. Even the CEO of Fiat Chrysler parent Stellantis (STLA) has warned of a looming shortage . Obviously, without a battery to go in it, there’s really no electric car. Could every established automaker, plus the many EV startups hustling to bring vehicles to streets, all secure the battery supplies they need? Farley has been confident Ford will be accomplish it, and Thursday’s announcement for 2023, at least, indicates the battery piece to the production puzzle is in place. Ford’s partnership with CATL also is interesting. Ford already has a relationship with two South Korean battery suppliers, LG Energy Solution and SK On. In fact, Ford is building battery plants in Tennessee through a joint venture with SK . The decision to work with CATL — shorthand for Contemporary Amperex Technology — introduces a second type of battery into Ford’s EV lineup and, in theory, will allow Ford to more easily ramp up vehicle production in the near term. CATL will be supplying Ford with what’s known as LFP batteries. To date, Ford has been using NCM batteries. Both are part of the larger lithium-ion battery family, but LFPs are a lower-cost option. On a call with investors Thursday morning, Ford management indicated LFP batteries are about 10% to 15% cheaper than NCM, while adding they also reduce the company’s reliance on “scarce critical minerals” like nickel. A major trade-off between LFP and NCM batteries is range. LFP batteries offer less range per pound. However, LFP batteries hold up well over time, providing customers “many years of operation with minimal loss of range,” according to a Ford investor presentation. On the investor call, Ford management declined to detail, specifically, what it expects its global mix of batteries to be over the medium to long term. We do know that Ford’s Mustang Mach-E will be the first to have the LFP battery pack, starting in 2023, followed by the F-150 Lightning pickup truck in 2024. Bottom line As noted earlier, battery availability has been one of investors’ primary concerns about the auto industry’s large-scale pivot toward EVs away from the internal combustion engine. It’s never been a question about demand — it’s all about supply. The devil is in the details, and Ford gave us assuring ones Thursday. We’ve been believers in Ford’s multi-year EV strategy, but in the near term, this is incrementally positive news — especially when you consider what part shortages have done to the auto industry during the Covid pandemic. A lack of semiconductor availability, in particular, has affected production for well over a year, forcing automakers like Ford to temporarily suspend production at various times and, consequentially, reduced the number of vehicles available to sell . There’s still work to be done on the chip front, so we’re glad to hear Ford management indicate that battery supplies, at least, will not be what stands in the way of the company’s 2023 goals for EVs. Other things could still go wrong, including a possible U.S. recession, which is generally not good for vehicles sales. But it’s certainly nice to hear Ford is confident in its near-term battery supply. We have a 2 rating on Ford, meaning we’d be buyers on a pullback. The stock was up around 0.8% Thursday, in a down day for the Dow and relatively flat session for the S & P 500 . We’ve trimmed our Ford position a number of times this year, most recently in early April when we recognized the Federal Reserve was about to be forced to raise interest rates faster than expected to combat inflation . The average sale price in each trade has been solidly above where the stock is currently trading in the mid-to-high $12 per share range. Our cost basis is $9.36 per share. For us to start buying again, we think we’d like the stock to be a little lower than its Thursday market price or if we feel the Fed is closer to the end of its hiking cycle . We know sentiment isn’t necessarily in Ford’s favor, due in part to recession fears, but don’t overlook the fact the stock is yielding a little over 3%. We’re absolutely happy to collect that dividend and wait. (Jim Cramer’s Charitable Trust is long F. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
