Ford's Plan for Millions of Future EVs Could Come With Layoffs
Ford revealed its most recent measures to improve its capacity of batteries and supply of raw materials to make it happen, albeit layoffs may be imminent. Ford announced its newest moves to satisfy the demand for its popular electric vehicles and support ambitious future ambitions. With the help of these measures, Ford will be able to build 600,000 vehicles annually by the end of 2023 and more than 2 million by the end of 2026. Ford delivered less than 28,000 battery-electric vehicles in 2017, yet the company is investing $50 billion to dominate the EV market.
Additionally, the manufacturer is struggling to keep up with the demand. The Mustang Mach-E electric SUV and the Ford F-150 Lightning electric full-size pickup vehicle both have lengthy waiting lists for customers. In order to enhance production, Ford had to close order books. The company now produces 2,000 Mach-Es every week, but when Ford retools to commit the whole Cuautitlan, Mexico, factory to the electric Mustang next year, the run rate will treble.
The production breakdown to attain the worldwide run rate of 600,000 EVs is as follows:
⬤ 270,000 Mustang Mach-Es will be sold in China, Europe, and North America.
⬤ For North America, 150,000 F-150 bolts of Lightning
⬤ 150,000 Transit EVs for use in Europe and North America
⬤ 30,000 units of a brand-new midsize SUV will be produced for Europe starting in 2024.
Ford claims to have obtained 70% of the battery capacity required to fulfill the 2026 objectives of 2 million EVs annually as well as the 60-gigawatt hours required to support the first phase of the manufacturing plan, which calls for the production of 600,000 EVs annually.
It's significant that Ford is expanding its battery chemistry lineup to include lithium iron phosphate (LFP) in addition to its current nickel cobalt manganese (NCM) chemistry. A crucial step toward making vehicles like the Mach-E profitable—something that has slid with increased material costs—LPP minimizes the reliance on limited minerals and offers a 10-15% cost savings. During a conference call with investors, Ford Model E vice president Lisa Drake stated that battery prices are where the battle would be won in the near future.
In North America, starting the following year, Contemporary Amperex Technology Co. (CATL) will offer LFP battery packs for Mach-E and the next-generation Lightning. Ford and CATL are searching for alternative strategies to deliver more batteries in China, Europe, and North America in order to reach the 2 million manufacturing target. A new CATL facility has not yet been given a specific site.
Purchase of More Batteries
LG Energy Solution has boosted capacity in Poland to deliver additional batteries for the Mach-E and E-Transit in order to increase the supply of the NCM batteries that are currently required. Additionally, SK On will establish another joint-venture factory in Turkey and has already installed more NCM batteries with a higher capacity for the Lightning and E-Transit.
Ford anticipates having 40 gigawatts of locally produced battery cell capacity in North America by 2026. According to Drake, who declined to offer more details, this will be in addition to the three battery factories that are already scheduled to be built in Tennessee and Kentucky.
Ford is aiming to expand its sources in North America as it develops a new EV supply chain in order to obtain the raw materials required. The carmaker has ambitions to build a cathode production plant in North America and is collaborating with businesses that mine and supply resources all around the world, including Canada, Indonesia, and Australia.
The company is also attempting to solve problems with the infrastructure for charging. Only 95% of public charging efforts are effective, according to customer feedback, and 20% are annoying. Drake claims that the business is attempting to provide clients with more up-to-date information regarding stations. Additionally, serving fleet clients requires dependable charging.
Cost Cutting And Layoffs
The Ford+ strategy, which calls for the reduction of $3 billion in yearly expenditures by 2026 in order to free up the funds required for the switch to electric vehicles, calls for all of these activities. Jim Farley, the CEO of Ford, wants the business to increase its profit margin from 7.3 percent last year to 10 percent by 2026. By 2026, Farley wants EVs, which cost more to make due to the battery pack, to have an 8% profit margin. Since the manufacturer wants more than half of its worldwide output to be EVs, this is essential to profitability.
On the media call, representatives from Ford declined to address media claims that the company intends to lay off thousands of white-collar employees, many of whom are connected to the heritage division of the company that produces cars with internal combustion engines. According to Bloomberg and The Wall Street Journal, salary-paying employees in the departments of sales, marketing, engineering, and corporate services will be let go. The impact on factory workers is not anticipated.
Ford revealed intentions to split the business into two sections in March. While Ford Model E staff continue to work on conventional gas and diesel-powered cars, which still account for the majority of sales and produce the earnings required to fund EVs, Ford Blue employees are concentrated on EVs, software-defined vehicles, and other future technologies. Farley has previously said that the legacy site of the company is very complex and that many of the legacy employees lack the necessary abilities to transition to the EV side of the company.