by As electric vehicles enjoy unprecedented popularity, lingering supply chain problems and growing fears of a recession are beginning to hit the auto industry.
Electric vehicle sales rose 65% in Europe last year and doubled in the United States.
But automakers face higher material and labor costs and supply chain problems.
The popularity of electric vehicles has increased over the past two years as more automakers have launched additional options for sedans, SUVs and pickup trucks, but hurdles remain as the global economy slows due to higher inflation and interest rates.
ford ( †f) – Get report from Ford Motor Company) said on June 22 it chose Valencia, Spain to increase its electric vehicle production in Europe rather than Saarlouis, Germany. Still, a Ford spokesperson told Reuters there would be “significant” cuts in the number of employees working there alongside the Saarlouis plant.
Restructuring would take place in the near future and the number of jobs lost would be “significant”, the spokesman said without providing details.
Ford spokesman Michael Baumann told TheStreet that “we are not building all-electric vehicles in Valencia at this time.” “However, for that to happen, there will have to be a restructuring in Valencia compared to the current situation.”
The other contender for the project was Ford’s Saarlouis plant, which will continue to produce its Focus passenger car until 2025.
“We will now evaluate future opportunities for sites in Saarlouis, Germany, which will also require restructuring,” Baumann said.
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Ford wants to sell many EVs in Europe
Ford’s goal is to sell 600,000 EVs annually in Europe by 2026. Ford is continuing its plan to invest $2 billion to convert its plant in Cologne, Germany, to begin EV production there in 2023. Ford plans to electrify its Ford Puma for consumers and the electric Ford Pro vehicles for its commercial segment.
Ford’s plan to add EV models is part of the company’s goal to sell more than 2 million EVs by 2026 and have an adjusted EBIT margin of 10% by 2026.
In Europe, the number of EVs sold increased by 65% to 2.3 million by 2021, according to the International Energy Agency’s global EV forecast in May 2022.
The European Parliament voted in June that light vehicles must be 100% emission-free by 2035.
In the US, the number of EVs sold has nearly doubled from 308,000 in 2020 to 608,000 in 2021, including plug-in hybrid EVs, according to the US Department of Energy. EV sales are up 85% between 2020 and 2021, while PHEV sales are up 138% from the previous year.
Tesla plans layoffs
Ford is not the only carmaker with financial problems. tesla ( †TSLA) – Get Tesla Inc. Report) recently said it plans to lay off 3.5% of its total workforce.
CEO Elon Musk said at a Bloomberg event that the electric vehicle manufacturer plans to eliminate 10% of its salaried workers over the next three months and add more employees per hour.
Tesla stock has fallen 29.6% in the past six months. Musk, who is also CEO of SpaceX, made a $44 billion takeover offer for Twitter in April, leading some to fear he would be distracted from Tesla if the deal goes through.
The company was also sued in June by two former employees who allege Tesla violated US federal “mass layoffs” laws. Tesla is also dealing with allegations of racist actions against its black employees. The company was sued in February by the California Department of Fair Employment and Housing over racial discrimination and harassment complaints.
