Ford has reached a series of deals to buy battery-grade lithium from the world's top producers as the U.S. automaker aims to meet its 2 million electric vehicles (EV) production target by 2026.

Ford struck deals with U.S.-based Albemarle Corp and Chile's SQM, two of the biggest names in lithium production, as well as Canada's Nemaska Lithium, according to separate announcements issued by the company Monday, Reuters reported.

The company has been making efforts to diversify its market share in EV production after Ford became the second leading EV seller in the U.S. last year after the Elon Musk-owned Tesla.

The expansion of the electric vehicle industry has set the stage for companies to ramp up their efforts to explore and control lithium deposits essential to making electric car batteries, as per a Vice News report.

Lithium is among the common ingredients found in almost all electric car batteries. Automakers and federal officials have admitted that securing a robust supply of the materials needed for electric vehicle batteries has been a pressing issue. According to officials, the global supply of lithium has to be increased by 42 times by 2050 in order to meet the surging demand for electric vehicles worldwide.

The rising demand also paved the way for the Biden administration to introduce subsidy programs and incentives for EV makers. The incentives were aimed at lowering the cost of EVs and accelerating the growth of the EV market. Stemming from the Inflation Reduction Act (IRA) passed last August, the EV tax credits worth $,7500 require that at least 75% of the battery components or raw materials for an electric vehicle are sourced from North America or countries with U.S. free-trade agreements.

Interestingly, Ford also signed deals with U.S. companies, or those based in countries with free trade agreements such as Canada to ensure its EVs qualify for as much as $7,500 in U.S. tax credits.

"Working with strong global collaborators such as Albemarle, which has well-established operations and a proven track record of scaling facilities, helps us fortify and de-risk our plans for sourcing the key minerals we need to make EVs more accessible for our customers longer-term," Lisa Drake, Ford's vice president of EV Industrialization, said, as per Investopedia.

Geopolitical conflicts and global disruptions in energy markets have also emerged as catalysts for industry leaders to join the federal push for net-zero carbon emissions. As an important resource for EV batteries, lithium became critical to the ongoing electrification transition worldwide and the boom in production for electric vehicles.

However, the lack of availability of critical battery materials, including cobalt and nickel, have been concerning for many EV makers attempting to strengthen their electric lineups.

"The mining part is not the constraint. It's really the processing," Ford CEO Jim Farley told Bloomberg. "So turning those raw materials, especially lithium and nickel, into processed materials we can put into a slurry to make the cells themselves."

After the Biden administration has been seeking companies to reduce dependency on China for EV materials, many firms are turning to Chile's massive lithium-containing salt flats for their EV battery needs. Currently, only two lithium companies are operating in Chile, including North Carolina-based Albemarle and SQM, the Santiago-based No. 2 producer. Chile also has a free trade agreement with the U.S., making it a strategic partner for the country. At the same time, Canada is positioning itself as a source of metal for the automobile industry in North America.

Meanwhile, since January, lithium, often regarded as white gold, also saw a fall in prices by nearly 20% early this year, making electric vehicles more affordable. Other battery materials, including copper and cobalt, are also witnessing a decline in prices, according to Benchmark Minerals.

Labourers work at a lithium plant on the Atacama salt flat
Laborers work at a lithium plant on the Atacama salt flat Reuters