What the EV giveth, the EV taketh away.
The auto industry is beginning to reckon with the knock-on effects on its legacy gasoline-based business because of how it is investing feverishly in all-electric and hybrid-electric vehicles as the future of car transportation. It’s up to automakers and to economic-development officials in states like Michigan to deal with the fast-coming transition.
An early case in point is unfolding with Ford Motor Co., which reportedly is preparing to cut up to 8,000 jobs in the coming weeks in its salaried workforce as well as in the Ford Blue unit it created in March to run the company’s internal-combustion-based (ICE) operations.
At the same time, Ford just announced a series of initiatives for sourcing and investing in battery capacity and raw materials that are meant to facilitate reaching its targeted annual run rate of production of 600,000 electric vehicle by late 2023 and more than two million by the end of 2026. That news followed Ford’s announcement in June that it would invest $2 billion and create 3,200 more jobs in Michigan, many of them to support expanded production of the all-electric F-150 Lightning. Ford is calling its EV unit Ford Model e.
“We have too many people” on the Ford Blue side, Ford President and CEO Jim Farley said recently at a Wolfe Research conference. While Ford didn’t confirm the coming job cuts, the company and the entire auto industry are facing the reality that it takes about 30% fewer workers—mostly because of the lack of an engine and traditional transmission—to make EVs than it does to make traditional vehicles.
At the same time, Ford is counting on the continuing popularity of its gasoline-powered vehicles, such as the new Bronco SUV and its other utility-vehicle nameplates, to fund most of the tens of billions of dollars of investments the automaker plans in order to help lead the industry to the other side of the EV divide.
“Ford Blue and Ford Model e are distinct businesses, yes, but they are complementary, and their strategies are intertwined,” Farley told Chief Executive earlier this year. “They’re going to make each other better. In Ford Blue, we have the secret weapon of industrial knowhow and scale that any EV startup would envy. And in Ford Model e, the top talent we’re bringing together will create cutting-edge software and embedded systems for all of Ford’s vehicles—not just EVs.
“These two focused businesses aren’t just going to co-exist—they’re going to cooperate, they’re going to make one another better, and they’re going to be pivotal to each other’s success.”
At the same time Ford and other automakers are beginning to figure out how to make the transition, political leaders in big auto-job states are doing the same thing. To that end, for instance, the Michigan Economic Development Corporation is “working on” the problem and “trying to be very creative,” Quentin Messer, chief executive officer of the state organization, told Chief Executive recently.
“We’re going to be creative about helping [auto employees] reapply the skills they have” if they’re victimized by the industry’s shift to EVs, Messer said. At the same time, he said, “People have to be versatile and adaptable in their skills.”