Massive layoffs plan to restructure European operations

Ford Motor (F) announced that it plans to lay off approximately 14% of its European workforce, or 4,000 employees, or 2.3% of its global workforce, by the end of 2027. The layoffs are mainly concentrated in Germany and the United Kingdom, with 2,900 and 800 respectively, and will reduce the production of Explorer and Capri electric vehicles at the Cologne plant in Germany. Peter Godsell, vice president of Ford Europe, said that restructuring has become inevitable due to lower-than-expected demand for electric vehicles and operating cost pressures. If the market deteriorates further, the scale of layoffs may expand.

Demand for electric vehicles is sluggish and policy support weakens

The electric vehicle market is cold in Europe, and Ford pointed out that Germany's termination of subsidies is one of the main reasons. The German government terminated subsidies for electric vehicles in December 2022, resulting in a 28.6% decline in sales in the first nine months of this year. Ford Chief Financial Officer John Lawler criticized the lack of clear policies in Europe and Germany to support electric vehicle infrastructure development and market incentives, such as charging station construction or flexible carbon reduction policies.

China competes in electric vehicle subsidies, EU tax response

Ford faces increasing pressure from China rivals. China's electric vehicle manufacturers are seizing the market with government subsidies, making it more difficult for Ford and other European car companies to compete. In order to balance competition, the EU imposed tariffs on China's electric vehicles, but the move failed to solve the fundamental problem of sluggish overall demand.

High-cost environment and geopolitical challenges

Marcus Wassenberg, managing director of Ford's German branch, said that labor and energy costs in Germany are much higher than those in other regions, which has caused the company's operating pressure to double. German unions expressed dissatisfaction with the layoffs plan, believed that there were still other options and were preparing to fight fiercely. In addition, geopolitical tensions have also exacerbated challenges, such as Europe's trade friction with China and the possible impact of the next Trump administration in the United States on international business.

Ford's global business is under pressure, and it is urgent to cut costs

Ford is not only under pressure in its European operations, but also in a difficult situation in the U.S. market. The company lags behind General Motors (GM) in the production efficiency of traditional fuel-fired vehicles and is affected by supply chain, quality and warranty issues. Ford is trying to cut waste and reduce global operating costs to adapt to the competitive electric vehicle market.