Ford plans up to 8,000 job cuts to help fund electric vehicle investment

DETROIT (BLOOMBERG) – Ford Motor is preparing to cut as many as 8,000 jobs in the coming weeks as the automaker tries to boost profits to fund its push into the electric-vehicle (EV) market, according to people familiar with the plan.

The eliminations will come in the newly created Ford Blue unit responsible for producing internal combustion engine vehicles, as well as other salaried operations throughout the company, said the people. The plan has not yet been finalised and details could still change.

The move would mark a significant step in chief executive officer Jim Farley’s plan to cut US$3 billion (S$4.2 billion) of costs by 2026. He has said he wants to transform Ford Blue into “the profit and cash engine for the entire enterprise.” In March, Mr Farley radically restructured Ford, cleaving its carmaking in two by creating the “Model e” unit to scale up EV offerings and “Ford Blue” to focus on traditional gas burners like the Bronco sport-utility vehicle.

The job cuts are expected to come among Ford’s salaried ranks in a variety of operational functions, according to the people familiar. They may come in phases, but are likely to begin this summer, the people said. Ford employs about 31,000 salaried workers in the United States, where the bulk of the cuts are expected.

Ford declined to comment on possible job cuts, saying that it’s focused on reshaping the organisation to capitalise on the growth of electric vehicles. “As part of this, we have laid out clear targets to lower our cost structure to ensure we are lean and fully competitive with the best in the industry,” the company said in a statement.

Mr Farley has said cutting staff is a key to boosting profits, which have evaporated on its electric Mustang Mach-E and other plug-in models amid rising commodity and warranty costs.

Ford’s shares tumbled 39 per cent this year through Tuesday, worse than the broader market, amid inflation fears and supply-chain snarls roiling the automotive industry.

In March, Mr Farley boosted spending on EVs to US$50 billion and set a plan to build 2 million battery-electric vehicles annually by 2026, after selling just 27,140 in the US last year. Last month, Ford’s EV sales rose 76.6 per cent from a year earlier as it rolled out the hot new electric F-150 Lightning pickup.

To finance Ford’s electric ambitions, Mr Farley has said he needs the company’s traditional gas-fueled models to make more money.