Ford Motor Company (NYSE:F) has said it will cut a total of 3,000 salaried and contract jobs, mostly in North America and India, Reuters reported, as it restructures to catch up with Tesla Inc (NASDAQ:TSLA) in the race to develop electric vehicles.
"We are eliminating work, as well as reorganizing and simplifying functions throughout the business. You will hear more specifics from the leaders of your area of the business later this week," Ford chief executive Jim Farley and chairman Bill Ford said in a joint email to staff on Monday, Reuters reported.
Farley and Ford said the company's cost structure "is uncompetitive versus traditional and new competitors", Reuters added. Rising prices for batteries, raw materials and shipping are putting additional pressure on automakers but Ford has stuck to its full-year profit forecast, despite seeing $3 billion in higher costs due to inflation.
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Ford has already begun separating its operations into electric, the combustion engine and commercial vehicle operations. Farley said in July 2022 that "cost reduction will happen" in the combustion operations, but he has now said the staff cuts will affect all parts of the company.
Tesla's pre-tax profit margins have exceeded Ford's this year, and Reuters pointed out that Farley has been blunt about the need to cut costs. Going forward, Farley has mapped out a strategy for Ford to develop a broad lineup of electric vehicles as, like Tesla, the company wants to generate more revenue through services that depend on digital software and connectivity.
In late 2018, rival General Motors company moved to cut 14,000 jobs as it prepared to accelerate its electric vehicle strategy.
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