Motor (F) announced plans to cut 3,800 jobs in Europe—about 11% of its workforce in the region—as the U.S. auto maker looks to lower costs and shift focus toward electric vehicles and digital services.
The move is the latest sign of disruption caused by the automotive industry’s transition toward a battery-powered product portfolio, where old jobs are eliminated while new ones are created. And global powers from U.S. to Europe are scrambling to win out in the race of low-carbon transition.
Aiming to catch up with trailblazers like
(TSLA), Ford aims to have half of its global sales come from electric vehicles by 2030, and plans to offer an all-electric fleet in Europe by 2035. The company has previously noted that electric vehicles are less complex to make and therefore call for much leaner teams.
Chief Executive Jim Farley has said publicly that much of the firm’s workforce—hired to support a traditional combustion technology product lineup—doesn’t have the skills required for the electric vehicles business. The auto maker already announced 3,000 job cuts last year, mostly in North America and India.
“Paving the way to a sustainably profitable future for Ford in Europe requires broad-based actions and changes in the way we develop, build, and sell Ford vehicles,” said Martin Sander, general manager of Ford’s electric car unit in Europe on Tuesday. “This will impact the organizational structure, talent, and skills we will need in the future.”
The restructuring pain for some can be a boon for others. Despite plans for more than $3 billion annualized savings and thousands of job cuts, Ford has committed to invest over $50 billion in EV transition through 2026.
Just one day before its Europe layoff, Ford announced that it will invest $3.5 billion in a new EV battery plant in Marshall, Mich. Production is slated to begin in 2026, with 2,500 jobs created to start with and potentially more capacity down the road.
Since 2019, Ford and its battery tech collaborators have announced $17.6 billion of investment in EV and battery production in the U.S. This would lead to more than 18,000 direct jobs and 100,000 indirect jobs in the market, according to the company.
Ford will benefit from the Inflation Reduction Act passed last year, the company said in a statement, and create “one of the lowest-cost U.S.-produced batteries.” Bringing the new battery plant to America could also reduce traditional shipping and import costs, the company says.
The IRA is set to allocate $369 billion worth of subsidies to a range of industries that would help reduce emissions and improve climate adaptation. The spending package—largest of its kind from any national government—has sparked concerns from other regions that more green investment would flow to the U.S. due to the attractive incentives.
To counter such threat, EU lawmakers have proposed a new “Green Deal Industrial Plan” that aims to speed up the permit process for green manufacturers, loosen up rules for green subsidies, and close the gap of skills needed in green jobs. U.K. business leaders are also urging the government to develop clean energy manufacturing and jobs, or risk being left behind.
To be sure, Ford has also been investing in its EV transition in Europe as the firm aims to offer an all-electric fleet in the region by 2035. This includes plans for a battery plant in Turkey and a $2 billion investment to produce electric models at its Cologne factory. Still, restructurings in Europe are generally tough and costly owing to government and union approvals, Benchmark analyst Michael Ward wrote in a report.
According to an analysis by Boston Consulting Group, the shift to EVs in Europe would lead to 630,000 fewer jobs at auto makers and suppliers for combustion-engine vehicles by 2030, while booming demand for batteries, charging infrastructure, and other related industries will create 580,000 new roles.
Another analysis from the European Association of Automotive Suppliers estimates that the electrification of the auto industry could cost 275,000 jobs by 2040, even after accounting for the new positions created by EV production.
Write to Evie Liu at firstname.lastname@example.org