Ford chief warns electric vehicles require 40% less labor

Making electric vehicles requires 40 percent fewer workers than building gasoline-powered cars and trucks, Ford’s CEO said.

Jim Farley on Tuesday warned of “thunderclouds” in the next phase of the switch to electric cars. His company has set a goal of half of global sales to come from electric cars by 2030, part of a broader shift among manufacturers.

“It takes 40 percent less labor to make an electric car, so . . . we need to insource so everyone has a part to play in this growth,” Farley said at a conference in Detroit aimed at improving racial diversity in the auto industry.

“We need to roll out a whole new supply chain, in batteries and motors and electronics, and diversity needs to play an even bigger role in that,” Farley told civil rights activist Jesse Jackson, whose Rainbow Push Coalition sponsored the conference.

The transition to electric vehicles is widely expected to reduce the number of jobs in the automotive industry, as they are assembled from fewer parts compared to cars powered by internal combustion engines.

The industry has been highly organized by unions for decades and pays wages that place workers in the middle class. The United Auto Workers union estimated in 2018 that the transition to electric vehicles could cost 35,000 jobs out of the 400,000 workers it represents.

Potential job losses are also predicted elsewhere. A report by a German working group found that the country’s auto sector could lose 400,000 jobs over the next decade due to a shift to electric power.

Farley has said since July that Ford has “too many people”. In August, it cut 3,000 employees and contract workers, with executives calling the company’s cost structure “uncompetitive” compared to other automakers. At the end of 2021, Ford had 183,000 employees.

The traditional supply chains of car manufacturers are gradually being replaced by the production of batteries, the most valuable parts of electric cars or trucks. Tesla and Panasonic have been working together since 2014 to build batteries at the electric car maker’s first Gigafactory in Nevada.

Ford and General Motors have partnered with battery makers SK Innovation and LG Chem, respectively, to build plants in the US to supply batteries for their growing EV offerings.

A shift in corporate strategy toward more vertical integration at Ford would hark back to the company’s early days, when founder Henry Ford owned forests, iron mines, limestone quarries and even a rubber plantation in Brazil to completely control the company’s supply chain.

“If Henry Ford came back to life, he wouldn’t have thought the last 60 years weren’t that exciting, but he would love it now because we’re completely reinventing the company,” Farley said.

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