Ford Motor Co. has announced plans to reduce its European workforce by 14%—eliminating 4,000 jobs by the end of 2027—as it faces mounting challenges in the electric vehicle (EV) market. The move comes amid sluggish sales, stiff competition from subsidized Chinese automakers, and what Ford describes as a lack of government support for EV adoption, as per an Associated Press report.

The cuts will primarily affect Germany and the United Kingdom, where Ford will slash 2,900 and 800 jobs, respectively. An additional 300 jobs will be cut in other European countries. The automaker, which employs 174,000 people globally and 28,000 in Europe, emphasized that the reductions will be implemented in consultation with employee representatives, the report added.

“The global auto industry continues to be in a period of significant disruption as it shifts to electrified mobility,” the company said in a statement. “The transformation is particularly intense in Europe where automakers face significant competitive and economic headwinds while also tackling a misalignment between CO2 regulations and consumer demand for electrified vehicles,” the statement said, as quoted by AP.

Ford sales

The company’s sales figures reflect the challenges. In the first nine months of 2023, Ford’s sales in Europe plunged 17.9%, a sharp contrast to the overall industry decline of 6.1%. Ford’s market share shrank to 3%, down from 3.5% in 2022, as it struggled to compete with lower-cost EVs produced by Chinese automakers.

Germany, a key market for Ford, has seen EV sales plummet by 28.6% in the same period. The country ended subsidies for electric cars in December 2022, further complicating the transition for automakers.

In response, Ford has urged the German government to take decisive action. In a letter, Ford CFO John Lawler called for “clear policy measures” to support EV adoption, including investments in charging infrastructure and incentives for consumers, as quoted by AP.

The layoffs also come as Ford scales back production at its Cologne plant, where it manufactures the Explorer and Capri EVs. The company will also reduce working hours for employees at the facility.

Ford’s struggles align with broader challenges in the European automotive sector. The transition to electrification is being accelerated by stringent EU regulations requiring automakers to lower fleet-wide carbon emissions by 2025 and eliminate most internal combustion engine vehicles by 2035. Yet, high inflation and inadequate infrastructure have slowed consumer adoption of EVs.

Volkswagen, another major player, has also hinted at potential plant closures in Germany, signaling broader concerns within the industry.

Ford, which celebrates 100 years of operations in Germany next year, remains committed to the European market. However, the company’s latest actions highlight the urgent need for stronger government and industry collaboration to navigate the transition to electric mobility.

(With Inputs from AP, Reuters)