Ford F is set to reduce its European workforce by around 4,000 employees, approximately 14% of its regional headcount, citing weak demand for electric vehicles (EVs), insufficient government support for the EV transition and competition from subsidized Chinese automakers. The layoffs, representing 2.3% of Ford’s global workforce of 174,000, will primarily impact Germany and the U.K., with 2,900 and 800 positions cut, respectively. The U.S. auto giant plans to complete the layoffs by 2027. The move is part of the company’s restructuring program in Europe.
Ford will also scale back production of its Explorer and Capri EV models at its Cologne facility. This move comes as Ford continues a costly restructuring of its European operations, which included 3,800 job cuts announced in early 2023 and the planned closure of its Saarlouis plant in Germany next year. According to Ford Europe vice president Peter Godsell, the company is grappling with weaker-than-expected demand for EVs and significant challenges around operating costs. This restructuring reflects Ford’s broader effort to streamline operations and compete in a rapidly evolving automotive market.
With EV operations under pressure and frequent layoffs to contain costs, investors are left questioning: Is Ford stock still a worthwhile investment or is it time for investors to rethink their positions?
Ford’s woes extend beyond Europe, with its EV business—operating under the Model e segment—struggling globally. In the third quarter, the unit reported an 11% year-over-year drop in wholesale volumes, a 33% decline in revenues and a loss of $1.22 billion before interest and taxes. The division is on track to incur a $5 billion loss this year, up from $4.7 billion in 2023 due to pricing pressure and costly investments in next-generation EVs.
With President-elect Donald Trump set to remove EV tax credits, things may get even tougher for the company’s EV business. Trump’s push to repeal the $7,500 EV tax credit is likely to hurt U.S. legacy automakers like General Motors GM and Ford, which still lean heavily on EV tax credits. Ford faces stiff competition in the EV market, not only from established rivals like Tesla TSLA but also from emerging Chinese players who benefit from government subsidies and cost advantages.
The economic backdrop has further complicated Ford’s recovery efforts. Inflation, particularly in Turkey where Ford has a significant joint venture, has heightened cost pressures. Rising material costs for the Transit van, a key product in Europe, are expected to squeeze margins further. Additionally, the automaker has yet to address internal challenges, such as high warranty expenses stemming from quality issues with older models. These warranty-related costs could take up to 18 months to stabilize, adding to Ford’s financial strain.
