Ford confirmed on Monday it’s cutting 3,000 jobs to help fund a $50 billion investment in electric vehicles. In order to slash costs while the company transitions from internal combustion to battery propulsion systems, the automaker plans to eliminate 2,000 salaried workers and 1,000 contract employees this week.
Most of the positions getting cut are in the US, while others are in Canada and India. Most of these positions are from Ford’s operations that build traditional internal combustion engine vehicles.
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According to Jim Farley, Ford’s chief executive officer, he wants to make more money on traditional gasoline-fueled vehicles like the Bronco off-road SUV. “We have an opportunity to lead this exciting new era of connected and electric vehicles; create the most growth and value for Ford and our stakeholders since we scaled the Model T; and continue to make a positive difference in our customers’ lives and society at large,” said Farley and executive chairman Bill Ford in an email to employees distributed on Monday.
Ford has started separating its operations into electric, combustion engine and commercial vehicle operations. Farley said in July that “cost reduction will happen” in combustion operations.
“Building this future requires changing and reshaping virtually all aspects of the way we have operated for more than a century. It requires focus, clarity and speed,” said Farley and Ford in their email. “This is a difficult and emotional time. The people leaving the company this week are friends and coworkers and we want to thank them for all they have contributed to Ford.” The email also said the company will begin notifying those affected by the cuts this week.
“We have a duty to care for and support those affected – and we will live up to this duty – providing not only benefits but significant help to find new career opportunities,” Farley and Ford said. “Thank you for all you do for Ford. Please continue to support each other, including colleagues who are leaving the company, as we build a strong and sustainable future.”
Beyond this, additional job cuts could come sooner than later. Ford is considering eliminating around 8,000 positions in total. Farley has repeatedly said the company has too many employees and that not enough of its workforce has the skills required as the industry shifts to electric vehicles.
“Our industry and the business environment in which we operate are changing with breathtaking speed,” said Farley and Ford. “And, as we have discussed in recent months, it means redeploying resources and addressing our cost structure, which is uncompetitive versus new competitors. We committed to sharing information as decisions are made along the way.”
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The company anticipates more than half its global production to be electric vehicles by 2030 while achieving carbon neutrality no later than 2050.
Ford announced in July plans to invest more than $50 billion in electric vehicles through 2026. By the end of 2026, Ford plans to build 2 million electric vehicles a year. That’s a huge increase from the 64,000 it made last year. Ford is restructuring to catch up with Tesla in the race to develop electric vehicles.