Ford plans to cut 3,200 jobs across Europe as the carmaker looks to cut costs and shift its focus towards electric vehicles. Most of the 2,500 jobs in product development and up to 700 in administrative roles the automaker is hoping to cut are located in Germany.
The news came from the largest union in Germany, IG Metall, which represents 2.2 million members in the metal, electrical, iron, steel, and automotive industries.
IG Metall warned that other cuts could fall at sites in Belgium and the UK, the Financial Times reported.
It comes as many automakers make plans to set up more factories in the U.S. after the landmark Inflation Reduction Act was passed last year, which included a tax credit for electric vehicles.
The tax credit specifies that the final assembly of cars must take place in the United States, Canada or Mexico in order to receive the main electric vehicle tax credit.
Ford announced last year a $2 billion investment in expanding production at its Cologne plant to make a mass-market all-electric model. On Monday, workers at the Cologne site, which employs around 14,000 people were informed at works council meetings of the plans to cut jobs.
Ford is planning seven new electric models in Europe, a battery-assembly site in Germany, and a nickel cell manufacturing joint venture in Turkey as part of a major electric vehicle (EV) push on the continent.
But it warned in June last year of “significant” job cuts to come in the near term at its factory in Spain and its plant in Saarlouis, Germany, as the shift to EV production meant it would require fewer labor hours to assemble cars.
The company’s chief executive, Jim Farley, said in November last year it took “40% less labor to make an electric car” than a traditional petrol model.
In a statement, Ford said: “We have no comment on the current speculation about a possible restructuring at Ford in Europe. Ford remains committed and is currently accelerating its plans to build an all-electric portfolio of vehicles in Europe.
“By 2030, all new passenger cars sold by Ford in the EU will be electric, and by 2035 all new Ford Pro commercial vehicles will be electric. This transformation requires a significant change in the way we develop, build and sell Ford vehicles, and will impact our organizational structure, talent, and skills we will need in the future.”
The law and its new electric vehicle tax credit provision have heightened trade tensions between the United States and other leading auto-producing countries such as France, Germany, South Korea, and Japan. European leaders, in particular, have publicly raised concerns with President Joe Biden that the tax credit and other IRA provisions that subsidize U.S. clean energy could be the death knell for European industry as an investment is siphoned away to the United States.