Ford Motor Company plans to lay off at least 1,000 employees and contract workers in North America in an effort to defray costs associated with the transition to electric vehicles.
People familiar with the matter told the Wall Street Journal of the automaker’s plans, which follow previous reductions of the workforce, including 3,000 jobs being cut in the U.S. Most of the cuts are to engineering positions.
Ford’s heavy investments in electric vehicles come amid a push from the Biden administration to hasten the transition from internal-combustion-engine vehicles. In April, the White House unveiled the strictest-ever emissions standards ever considered. The most aggressive proposal would have the auto industry cut emissions in passenger cars and pickups by half from 2026 to 2032.
“Ford lost $34,000 per electric vehicle sold last year. EV economics have not improved in 2023. So…another mass layoff at Ford. No one should be surprised,” explained Steve Milloy, a lawyer and longtime EPA critic, in a statement to National Review.
“Government-designed and mandated industrial policy is bound to fail, especially when there is little consumer demand for the product and no underlying tangible rationale for it,” Milloy added.
The infrastructure to support such a drastic shift in such a short amount of time is not there. The cost of rare minerals needed for electric vehicle batteries remains high and there are also concerns surrounding the availability of charging stations. Additionally, gas-powered vehicles still make up over 90 percent of the market share of new vehicles, reflecting the fact that electric vehicles are more expensive.
Ford expects to lose $3 billion in operating profit this year on its EV business. Automakers are particularly struggling to reduce battery costs. Ford CEO Jim Farley said last month that the cost of making an EV might not be equal to that of an internal-combustion-engine vehicle until after 2030, the Journal reported.
The company’s rivals are also struggling to cope with EV’s meager profitability. GM said in April 5,000 workers would depart, offering buyouts. Stellantis, which owns Chrysler, is doing the same.
The electric-vehicle push is only a small part of Biden’s climate-change agenda. The EPA is set to institute strict carbon limits for power plants. Additionally, Biden has announced the White House Office of Environmental Justice and is mired in a dispute with Senator Joe Manchin (D., W.Va.) over the climate-related sections of the Inflation Reduction Act.