Ford chief warns electric vehicles require 40% less labour

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Making electric vehicles will require 40 per cent fewer workers than building cars and trucks powered by petrol, the chief executive of Ford has declared, saying the carmaker needs to produce more parts in-house so that “everyone has a role” in the transition.

Jim Farley warned on Tuesday of “storm clouds” in the next phase of switching to EVs. His company has set a goal of half of global sales coming from EVs by 2030, part of a broader shift among manufacturers.

“It takes 40 per cent less labour to make an electric car, so . . . we have to insource, so that everyone has a role in this growth,” Farley said at a conference in Detroit focused on improving racial diversity in the auto industry.

“We have a whole new supply chain to roll out, in batteries and motors and electronics, and diversity has to play an even greater 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 auto industry because they are assembled from fewer parts compared with cars powered by internal combustion engines.

The sector has been heavily unionised for decades, paying wages that placed blue-collar workers in the middle class. The United Auto Workers union estimated in 2018 that the transition to EVs could cost 35,000 jobs out of the 400,000 workers it represents.

Potential job losses have been predicted elsewhere, too. A report from a German working group found that the country’s car sector could lose 400,000 jobs over the next decade amid 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 carmakers. Ford had 183,000 employees at the end of 2021.

Carmakers’ traditional supply chains are gradually being replaced with the production of batteries, the most valuable components of electric cars or trucks. Tesla and Panasonic have worked together since 2014 to build batteries at the electric carmaker’s first Gigafactory in Nevada.

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

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

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

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