It’s a headline-grabbing day for classic automaker Ford (NYSE:F) and tiny lithium-boron supplier Ioneer (NASDAQ:IONR) today. Reportedly, Ioneer has inked a lithium offtake agreement with Ford. This could help Ford reach its ambitious plans for electric vehicle (EV) production. Consequently, Ford stock was up slightly this morning and IONR stock was surging higher.
This agreement has the potential to be long-term and highly impactful to both companies. According to Ford’s press release, Ioneer has “signed a binding off-take agreement with Ford for lithium carbonate from Ioneer’s Rhyolite Ridge project in Nevada to support EV production beyond 2025.”
Why should this matter to Ford’s investors? It’s because Ford is on track to achieve a 600,000 EV run rate objective by late 2023. Furthermore, it states that lithium iron phosphate battery packs are coming for Mustang Mach-E models sold in North America next year, as well as for F-150 Lightning models sold in early 2024.
Thus, Ford is going to need a whole lot of lithium over the coming years — and Ioneer is prepared to deliver it.
What’s Happening with Ford Stock and IONR Stock?
The response among F stock investors wasn’t overwhelming today, but the stock was up slightly in early-session trading. For more excitement, you’d have to head on over to IONR stock.
Ioneer shares traded on above-average volume and have gained more than 8% so far today. This makes sense, as it’s a huge win for Ioneer to score a supply deal with a giant like Ford.
According to the agreement, over a five-year period, Ioneer will deliver a whopping 7,000 tonnes of lithium carbonate to Ford per year. This won’t commence until 2025, however, so don’t expect the impact to be immediate.
Ioneer Executive Chairman James Calaway is undoubtedly ecstatic about this agreement. He called it a “significant milestone.” It’s really an important moment for both companies, though, as Ford pursues dominance in the highly competitive EV manufacturing market.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.