Ford reduces production of electric truck, focuses on gas vehicles; hiring more staff
Ford to Make Significant Cuts to F-150 Lightning Truck Production as Electric Vehicle Demand Plummets
Ford announced this week that it will be making substantial cuts to its workforce responsible for producing the highly anticipated F-150 Lightning truck, as the demand for electric vehicles continues to decline. The company plans to reduce the number of employees at the Rouge Electric Vehicle Center, where the trucks are assembled, resulting in a single shift operation.
Bloomberg News reported that approximately 1,400 employees will be affected by these cuts. Ford had initially planned to produce around 3,200 F-150 Lightnings per week in 2024, but recently announced a reduction to 1,600 per week due to changing market demand.
This decision comes as Ford faces challenges in selling its all-electric vehicles to consumers who have concerns about transitioning from gas to electric, particularly due to high retail prices. In fact, the company has already slashed $12 billion in EV investments.
Interestingly, while demand for electric vehicles is declining, the demand for gas vehicles remains strong. As a result, Ford is hiring approximately 900 new employees and transferring 700 employees from the F-150 Lightning production to its Michigan Assembly plant to meet the demand for gas vehicles.
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In a related development, Hertz, one of the largest rental car companies in the U.S., recently announced that it will be removing tens of thousands of electric vehicles from its fleet due to low demand and high repair costs. This decision comes after Hertz had previously planned to purchase 100,000 Tesla Inc. vehicles in 2021.
The decline in demand for electric vehicles has been attributed to various factors, including high costs, limited charging infrastructure, and concerns about driving range in extreme weather conditions. Hertz CEO Stephen Scherr acknowledged the challenges associated with reducing the costs of EVs.
Morgan Stanley analysts have warned that Hertz’s move should serve as a wake-up call for the entire auto industry, indicating that expectations for the growth of the electric vehicle market need to be significantly adjusted.
These developments align with the concerns expressed by nearly 4,000 auto dealers across the U.S. in a letter to President Joe Biden, stating that his goal of having two-thirds of new cars sold be electric by 2032 is unrealistic. The dealerships highlighted the mismatch between the influx of electric vehicles and the current demand, despite price cuts and government incentives.
It is clear that the electric vehicle market is facing significant challenges, and both automakers and policymakers need to reassess their strategies to meet consumer demands and expectations.
Zach Jewell contributed to this report.
Despite the decline in demand, why is Ford remaining committed to its electric vehicle lineup and investing in electric vehicle production
Existing workers to its gas vehicle assembly plants to meet the sustained demand for traditional vehicles.
Ford’s adjustment to F-150 Lightning production reflects a larger trend in the electric vehicle market. Despite efforts to promote and incentivize the adoption of electric vehicles, many consumers still have reservations. Concerns about limited charging infrastructure, range anxiety, and the higher cost of electric vehicles compared to traditional gas-powered cars are all factors contributing to the slower adoption rate. Additionally, a lack of standardized charging systems and slower charging times compared to refueling gas vehicles further dampen the appeal of electric vehicles for some consumers.
Furthermore, the economic impact of the COVID-19 pandemic has played a significant role in shaping consumer demand for electric vehicles. Many individuals and businesses have faced financial difficulties during the pandemic, making the higher upfront costs of electric vehicles less affordable and less attractive compared to cheaper gas options. With economic uncertainty still prevalent in many parts of the world, it is not surprising that demand for electric vehicles has taken a hit.
Despite the decline in demand, Ford remains committed to its electric vehicle lineup. The company recently unveiled the all-electric Mustang Mach-E SUV, which has received positive reviews and strong early sales. Ford plans to invest $11.4 billion in electric vehicle production over the next few years and aims to have 40% of its global vehicle volume be electric by 2030. This long-term goal demonstrates Ford’s belief in the future of electric vehicles and its determination to navigate through the current challenges.
Overall, the announcement of significant cuts to F-150 Lightning production highlights the ongoing struggle for widespread adoption of electric vehicles. While there has been progress in terms of technological advancements and increased availability of electric models, there are still barriers to overcome before electric vehicles become the norm. Industry players, like Ford, face the challenge of balancing current demand for traditional vehicles while investing in and promoting electric alternatives. As consumers become more comfortable with the idea of electric vehicles and infrastructure improves, it is likely that demand will eventually rebound. Ford’s decision to adjust production is a strategic move to adapt to current market conditions, and it will be intriguing to see how the electric vehicle market evolves in the coming years.
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