German supplier Schaeffler plans to cut 1,300 jobs, or 1.6 percent of its global workforce, as the sector grapples with the shift from combustion engines to electric vehicles, the company said in a statement.
Schaeffler said the switch to EVs was leading to overcapacity in products for combustion-engine vehicles, and automakers were continuing to cut back on development programs for combustion engine cars.
"This step is necessary to align the company for the future," CEO Klaus Rosenfeld said.
Around three quarters of the cuts announced by Schaeffler on Tuesday will affect positions in administration and central functions in research and development for internal combustion engines, with the rest in production, the company said.
The restructuring will save around 100 million euros ($99.92 million) a year. It will cause expenditures of about 130 million euros, the majority of which will be recognized as provisions in the fourth quarter, the Bavaria-based company added.
Auto suppliers have struggled to shoulder the higher costs of making their components sustainable to meet automakers' environmental targets, on top of rampant inflation and energy prices.
The supplier ranks 29th on Automotive News Europe’s list of top 100 global suppliers, with automotive sales of $8.44 billion in 2021.