Ford’s Job Cut Is the Latest Disruption From the Green Transition 

Aiming to catch up with pioneers like Tesla (TSLA), Ford aims to generate half of its global sales from electric vehicles by 2030 and plans to offer an all-electric fleet in Europe by 2035. The company has previously indicated that electric vehicles are less complex to manufacture and therefore require much leaner teams.

Chief Executive Jim Farley has said publicly that much of the company’s workforce – hired to support a traditional combustion technology product line – does not have the skills required for the electric vehicle business. The automaker announced last year that it would cut 3,000 jobs, mainly in North America and India.

“Paving a path to a sustainable, profitable future for Ford in Europe will require broad-based action and change in the way we design, build and sell Ford vehicles,” said Martin Sander, general manager of the electric vehicle division from Ford in Europe, on Tuesday. “This will impact the organizational structure, talent and skills that we will need going forward.”

The pain of restructuring for some can be a blessing for others. Despite plans to save more than $3 billion annually and cut thousands of jobs, Ford has committed to investing over $50 billion in the EV transition by 2026.

Just a day before the European layoff, Ford announced it would invest $3.5 billion in a new electric vehicle battery plant in Marshall, Michigan. Production is slated to begin in 2026, initially creating 2,500 jobs and potentially adding more capacity later.

Since 2019, Ford and its battery technology associates have announced investments of $17.6 billion in electric vehicle and battery manufacturing in the United States. According to the company, this would result in more than 18,000 direct and 100,000 indirect jobs in the market.

Ford will benefit from the Inflation Reduction Act passed last year, the company said in a statement, and produce “one of the lowest-cost US-made batteries.” Moving the new battery factory to America could also reduce traditional shipping and import costs, the company said.

The IRA will allocate $369 billion in subsidies to a range of industries that would help reduce emissions and improve adaptation to climate change. The spending package — the largest of its kind by a national government — has raised concerns in other regions that more green investment would flow to the US because of attractive incentives.

To counter this threat, EU lawmakers have proposed a new “Green Deal Industrial Plan” that aims to speed up the approval process for green manufacturers, relax green subsidy rules and close the skills gap needed for green jobs becomes. British business leaders are also urging the government to develop clean energy production and jobs or risk being left behind.

Of course, Ford has also been investing in the EV transition in Europe, as the company aims to offer an all-electric fleet in the region by 2035. These include plans for a battery plant in Turkey and a $2 billion investment to produce electric models at the Cologne plant. Still, restructuring in Europe is generally difficult and costly because of government and union approval, benchmark analyst Michael Ward wrote in a report.

According to an analysis by the Boston Consulting Group, the shift to electric vehicles in Europe would result in 630,000 fewer jobs at automakers and suppliers of internal combustion engine vehicles by 2030, while booming demand for batteries, charging infrastructure and other related industries will create 580,000 new roles.

Another analysis by the European Association of Automotive Suppliers estimates that electrification of the auto industry could cost 275,000 jobs by 2040, even after accounting for the new jobs created by electric vehicle production.

Write to Evie Liu at [email protected]