Automobile manufacturing giant Ford has announced 4,000 job cuts across its European operations blaming stalled electric vehicle sales in the continent.
The move is said to be part of a wider restructuring program, with the company’s employees in Germany and the U.K. bearing the brunt of the announced cuts that will occur over the next three years.
Ford’s German workforce will see a reduction in headcount by 2,900 while 800 British jobs will also go, with the remaining 300 job cuts spread across Europe. A spokesperson in the U.K. said Ford had to act in the face of weak demand for EVs and challenging trading conditions.
However, the company is aiming to achieve all the job cuts through largely “voluntary means” by the end of 2027, the spokesperson added.
Challenging Climate
While Ford committed $50 billion in 2023 towards developing a new range of EVs as well as expanding its current range, its foray has been anything but challenging. The latest announcement is the company’s second round of European cuts in less than a couple of years, following a decision in February last year to trim its workforce.
Ford and its Western peers are facing strong competition from relatively cheaper EV imports from China hitting the European market. In response, the European Union has slapped tariffs on Chinese imports, which were raised in October to as high as 45.3% in variable bands depending on vehicle assembly lines and components.
China’s annual EV manufacturing spare capacity – of nearly 3 million vehicles – is thought to be more than twice the size of the current EU market. While the EU’s move provoked an angry response from China, some of its own members including Hungary and Germany also criticized the decision.
Ford Is Not Alone
However, some of the blame for Ford’s and the wider European EV industry’s problems is being apportioned to draconian regional climate targets as well. For instance, in the U.K., automakers face fines of up to £15,000 ($19,000) per car, if EVs do not make up a percentage of their headline sales in the market.
The figure, which stands at 22% this year, is due to rise to 28% in 2025 and to 33% in 2026. It will be raised each year thereafter to hit 80% by 2030.
However, the British car industry lobby group – the Society of Motor Manufacturers and Traders has said the U.K. government’s stance was unsustainable given the country’s EV sales market share had stalled at 18%. That too has been achieved off the back of £2 billion in collective price cuts by the industry to attract British customers.
For its part, Ford has raised concerns about such policies both in the U.K. and elsewhere on the continent. It’s European rivals are suffering too with BMW, Mercedes Benz and Volkswagen all posting recent declines in profits.
In September, Volvo joined GM and Ford in trimming its 2030 EV production target, and abandoning its ambition of being an EV-only automaker by the end of the decade.
Such developments have prompted the European Automobile Manufacturers’ Association to urge EU policymakers to address the steep compliance costs associated with imminent 2025 EV sales targets.
Last week, data from S&P Global revealed a worsening outlook for the European EV market. Between the first and second halves of 2024 market expectations significantly evolved, prompting a reassessment of EU trends by the ratings, research and analysis firm.
It subsequently published a substantial downward revision to its battery EV market share forecast for 2025, from 27% in the first half of this year to 21%, as a sobering picture continues to emerge across the continent.