Ford Layoffs a Sign of Its Crippled EV Business

Ford Motor Co. (NYSE: F | F Price Prediction) cut 1,000 workers in Germany because of slow electric vehicle (EV) sales. It is part of a layoff of 2,900 workers. This happens as other large legacy car manufacturers up their game in the region in the hope of gaining EV market share from Tesla and emerging Chinese EV manufacturers. Ford has decided not to follow but rather signal a retreat.

Ford’s logic is partly that it expected a third of European sales would be EVs. Based on registrations, that number this year will be about 20%. The trend is like the one in the United States, but unlike China. Ford EVs globally are not close to meeting the expectations articulated three years ago.

Its EV sales in China are barely a part of its global EV program. That leaves the U.S. and several smaller markets for Ford to increase its EV business. The company says it will lose $5 billion in its EV business this year. It needs to show investors that, if it does not have EV sales, it has cut expenses.

One challenge in the EV sector is that, if EV sales outside China accelerate at some point, Ford will have backed away from the chance to be a part of that success, at least quickly. Its gasoline-powered business is spectacularly successful, so it has some financial comfort short term.

A Smart Play?

Perhaps Ford is making the smart play. There is a theory that EV sales will never dominate outside China. With so many EV companies based in China, attacking there is bound to be a failure.

Based on the results of the past three years, it was ill-advised for Ford to dump billions of dollars into the EV business.

Ford’s decision does fly in the face of major car companies that will not give up on EVs. Volkswagen and BMW are doubling down on the business. They think a surge in EV success is almost just around the corner. If they are wrong, financially, they will take a brutal beating.

Ford Wastes Millions on a Beaten Brand

Now that Ford has signaled that EVs are not as important as three years ago, it has run out of good news. Its record recalls make the good news business an even greater challenge. So, it has turned to a new marketing misfire about what a spectacular company Ford is. The campaign may not sell a single car. And, of course, there is a PR blitz about its new global headquarters. It will allow 14,000 of its employees to be a 15-minute walk to the new building.

Ford has not said so, but the new building should have a floor for workers to plan Ford’s EV retreat, and one where people work on its recalls.