Market News

Ford Inks Deal for Important EV Battery Material

Ford (F) is considering buying tonnes of lithium produced at Lake Resources’ (LLKKF) Kachi project in Argentina. Lithium is a key raw material in battery manufacturing. Many electric vehicles (EVs) run on lithium-based batteries. 

Ford is among the automakers making the switch to battery-powered EVs. It recently began producing an electric version of its Transit brand vans in Turkey for sale in European markets.

“This is one of several agreements we’re exploring to help us secure raw materials to support our aggressive EV acceleration,” said Lisa Drake, Ford’s vice president, EV Industrialization.

Sustainable Lithium Extraction

Lake Resources is an Australian lithium producer. Its Kachi project is designed to extract lithium in an environmentally sustainable manner. 

Lake Resources Chairman, Stu Crow, said,”Lake Resources is committed to integrating sustainable development practices throughout our operations, minimising our environmental footprint, and contributing to a clean energy future”

Ford is looking at purchasing 25,000 tons of lithium from the Kachi project annually. The automaker has initially signed a non-binding agreement with Lake Resources regarding the lithium supply. 

According to a Reuters report, the Kachi project, which is estimated to cost $540 million, is expected to open by 2024. Lake Resources is working with a Bill Gates-backed startup called Lilac Solutions to develop the project.

Wall Street’s Take

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on six Buys, six Holds, and two Sells. The average Ford price forecast of $21 implies 37.4% upside potential to current levels. Shares have increased 25% over the past year.

Blogger Opinions

TipRanks data shows that financial blogger opinions are 87% Bullish on Ford, compared to a sector average of 68%.

Key Takeaway for Investors

Obtaining lithium for its EV batteries from a sustainable project would be an added advantage in Ford’s effort to reduce its carbon footprint. 

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