With Ford cuts, EV-related layoffs start to hit home in Europe

Years of warnings about job losses from the transition to all-electric cars from internal-combustion powertrains are starting to become reality, as Ford this week announced it would cut nearly half of its European engineering staff of 6,200.

Martin Sander, Ford's EV boss in Europe, said the reason was, simply, that electric cars are much simpler. "These changes are driven by the transition to fully electric powertrains and drastically reduced complexity in our vehicles and operations," Sander said.

Going forward, Ford will rely on Volkswagen Group’s MEB platform for two electric cars built in Cologne that will launched this year and next year, sharing underpinnings with the VW ID4 and VW ID5. Its next-generation EVs will use a new U.S.-developed software-defined architecture.

"We clearly need a leaner and more competitive cost structure in Europe that is aligned to our future product portfolio of electric vehicles," Sander said on a conference call Tuesday morning.

Ford's remaining 3,400 Europe-based engineers, in the UK and Germany, will still be needed to develop "top hats" and other features to make the cars stand out in Europe’s ultra-competitive market, as well as maintain Ford’s lucrative commercial van business. But for 2,800 of them, there was not enough projects to keep them employed, Sanders said.

"There is significantly less work to be done on drivetrains, because we are moving out of combustion engines," he said. Ford is also trimming 1,000 administration positions.

Ford is one of the first companies to explicitly tie job cut announcements to electric cars’ reduced complexity, but it will certainly not be the last.

Automakers are seeking ways to wind down their development and production of internal-combustion engines, a task made more urgent on Tuesday when the European Parliament gave its final approval to a 2035 deadline to sell only zero emission cars.

Some are hoping to cushion the blow by teaming up to save money through scale, such as Renault and Geely’s Horse joint venture. Others are spending billions to convert existing plants to electric components, and retraining workers to assembly battery cells or packs.

Even so, tens of thousands of jobs are likely to be lost in the coming years, because EVs require far fewer parts than internal combustion cars. That means far fewer workers are needed to develop and build them. 

A 2021 study in France found that it takes about 22 workers to build 1,000 diesel powertrains (from block to transmission to exhaust) over the course of a year, but only 13.2 to build 1,000 EV powertrains, five of whom are involved in battery cell production.

In another measure, Tesla in 2021 planned to build up to 500,000 cars a year at its new German plant with 12,000 employees. At the time, Volkswagen employed 25,000 people to build 700,000 internal combustion cars at its home factory in Wolfsburg.

For former VW Group CEO Herbert Diess, the issue of EV-related job cuts may have hastened his departure last year, well before the expiration of his contract in 2025. Diess’ remarks about the potential loss of 30,000 jobs if VW could not match Tesla’s efficiency in building EVs angered German unions, even if he did not actually announce layoffs.

The next major job cuts news may come from Ford itself, which will shrink its factory footprint in Europe when it ceases production of the Focus compact car at its factory in Saarlouis, Germany, where 4,800 people are employed.

Saarlouis has attracted more than a dozen interested suitors, but so far a deal that could save thousands of jobs remains elusive. Any automaker hoping to build EVs there would need to spend hundreds of millions, if not billions, to convert the factory.