While electric vehicles are enjoying an unprecedented rise in popularity, continuing supply chain problems and growing fears of a recession are beginning to hit the auto industry.
EV sales rose 65% in Europe last year and doubled in the United States.
But automakers are facing higher costs for materials and labor along with supply chain problems.
The popularity of electric vehicles has grown over the past two years as more automakers have launched additional options for sedans, SUVs and trucks, but obstacles remain as the global economy slows amid higher inflation and interest rates.
Ford ( (φά) – Get the Ford Motor Company report) stated on 22 June that it had chosen Valencia, Spain, to increase EVs production in Europe instead of Saarlouis, Germany. However, a Ford spokesman told Reuters that there would be “significant” cuts in the number of workers working there along with its Saarlouis plant.
The restructuring will take place in the short term and the number of jobs that will be eliminated will be “significant”, the spokesman said without giving details.
Ford spokesman Michael Baumann told TheStreet that “we are not building fully electric vehicles at this point in Valencia.” However, “in order to do that, it will be necessary to restructure Valencia compared to the current situation.”
The other candidate for the project was Ford’s Saarlouis plant, which will continue to produce Focus passenger cars until 2025.
“We will now evaluate future site opportunities in Saarlouis, Germany, which should also include restructuring,” Baumann said.
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Ford wants to sell a lot of electricity in Europe
Ford aims to sell 600,000 EVs to Europe annually by 2026. It continues its plan to invest $ 2 billion to convert its plant in Cologne, Germany, so that it can begin manufacturing EVs there in 2023. Ford plans to electrify the Ford Puma for consumers and the Ford Pro electric vehicles for its commercial category.
Ford’s plan to add EV models is part of the company’s goal to sell more than 2 million EVs by 2026 and have a 10% adjusted EBIT margin from the company by 2026.
In Europe as a whole, the number of electric vehicles sold increased by 65% to 2.3 million in 2021, according to the International Energy Agency’s global outlook for May 2022.
The European Parliament voted in June that light vehicles should have 100% zero emissions by 2035.
In the US, the number of EVs sold nearly doubled from 308,000 in 2020 to 608,000 in 2021, including plug-in hybrid EVs, according to the US Department of Energy. EV sales increased by 85% from 2020 to 2021, while PHEV sales increased by 138% compared to the previous year.
Tesla is also planning layoffs
Ford is not the only automaker facing financial problems. Tesla ( (TSLA) – Get the Tesla Inc report) recently stated that it plans to lay off 3.5% of its total workforce.
CEO Elon Musk told a Bloomberg event that the EV maker plans to eliminate 10% of its employees over the next three months, while adding more hourly wages.
Tesla shares fell 29.6% in the last six months. Musk, who is also CEO of SpaceX, made a $ 44 billion takeover bid for Twitter in April, sparking fears that some would be distracted by Tesla if the deal was finalized.
The company was also sued in June by two former employees alleging that Tesla violated U.S. federal “mass layoff” laws. Tesla also faces allegations of racism against its black employees. The company sued the California Department of Fair Employment and Housing in February over allegations of racial discrimination and harassment.