Ford Motor Company (ticker: F) announced yesterday, Monday, September 27, 2021, that it will enter into a partnership with petroleum refining company SK Innovation Co (KRX: 096770) to invest $11.4 billion to construct two “mega-sites”. The two mega-sites will be located in Tennessee and Kentucky, and the automaker will use them to build electric trucks and batteries. $7 billion of this budget will come from Ford, which will be the company’s most significant manufacturing investment in its history.
Ford Executive Chairman Bill Ford talked about the project as a “transformative moment” that will see the company lead America’s transition to Electric Vehicles (EVs) that are perceived as drivers of clean, carbon-neutral manufacturing. Ford added that this investment would help the company achieve its goals of building great EVs and protecting the planet while at it. It should be noted that Bill Ford has long been a big fan of electric vehicles.
On the Tennessee site, Ford will construct the “Blue Oval City”, where the company will build an expanded electric truck line-up. Ford currently has the Mach-E, all-electric SUV on the market, and the company announced that the production of its second EV, named the F-150 Lightning, will soon kick-off. The Blue Oval City will sit on 3,600-acres, covering nearly six square miles, and is expected to create over 6,000 jobs once completed. Ford estimates the campus will cost $5.6 billion to build, and the company has not yet communicated when it will be opened.
The other site, BlueOvalSK Battery Park, will be constructed in Kentucky on a budget of $5.8 billion, sitting on 1,500 acres. The site will be dedicated to battery manufacturing for Ford’s electric cars, and once completed, it will create over 5,000 jobs. Ford expects this campus to open in 2025.
“This is our biggest investment ever, our moment to help build a better future for America as we move to deliver breakthrough electric vehicles for the many rather than the few,” Ford CEO Jim Farley said.
Farley said the jobs the two sites will create, which are projected to be over 11,000, would be essential in supporting American families, growing businesses that add value to the communities, dealers, and the company’s shareholders, all doing so in an ultra-efficient, carbon-neutral manufacturing system.
As large companies whose carbon footprint has been quite significant in the past now transition to green energy in an effort to slash their carbon emissions to net-zero by 2050, Ford is looking at having between 40% and 50% of its vehicles around the globe be fully electric by the end of this decade. This new investment will take the company’s total investment in electric vehicles to $30 billion by 2025.
Ford has had a good year, as its stock has soared 66.20% so far this year and more than 111% in the past 12 months. Currently, Ford has a market capitalisation of $55.56, and its stock is trading at $14.16 each.
In other auto news…
Before the achievement of 100% electric cars in global circulation can be realised, we have to rely on oil products like petrol to fuel our vehicles, a shortage of which spells disaster, as is the case in the United Kingdom (UK) now.
Oil prices in the UK have risen to more than $80 a barrel due to a fuel crisis that has been brewing in the previous four days, and these prices have made energy markets in the UK volatile. This is the highest oil prices have risen in the UK in three years.
At the opening bell of today’s trading session in London, Brent Crude (BZ=F) was trading at £58.75 (about $80.34), which is 1% higher, while Crude was also up around 1% to trade at $76.27 in the same session. This fuel shortage crisis has forced the UK government to resort to extreme measures, like drafting the army to support fuel supply efforts as more people are queueing up at petrol stations across the UK.
Up to 150 military tanker drivers will prepare to deliver to forecourts that have run dry because of panic buying.
Yesterday, the UK government was forced to suspend the competition law via the Downstream Oil Protocol to help oil companies join forces and deliver fuel to petrol stations running dry across the country. The Downstream Oil Protocol makes it possible for fuel producers, suppliers, hauliers and retailers to prioritise fuel delivery to strategic locations and parts of the UK that need it the most.
The fuel shortage crisis in the UK, which is one of the biggest economies in Europe, has caused ripples in European stocks. In London, the FTSE 100 opened 0.4% lower, in Germany, the DAX was down 0.9%, and in France, the CAC was struggling the most, after going 1.4% lower.
However, losses in some sectors turn out to be gains for others. As oil prices rise, energy stocks are having their share prices rise. Royal Dutch Shell (ticker: RDSA) and BP PLC (ticker: BP), which are among the biggest components of the FTSE 100, saw their stock rise nearly 2% today, Tuesday, September 28, 2021.
Royal Dutch Shell has a market capitalisation of $175.60 billion, and its stock is currently trading at $45.10 a share. The company has registered a year to date growth of 25.16%. BP, another energy giant that has benefited from this fuel shortage crisis, has a market capitalisation of $92.18 billion, and its stock is trading at $27.44. The company has seen its stock grow 33.28% this year so far.
However, the overall FTSE 100 index did not register a significant move due to Shell and BP’s upward movement because other index components like miners, pharmaceuticals, and financials were either struggling or trading flat.