Ford CEO: 40% less labor to build electric vehicles

Ford CEO Jim Farley made a blockbuster statement this week. According to the somewhat jovial and optimistic cousin of the late comedian Chris Farley, producing electric vehicles requires around 40% less labor than producing the same number of fossil-powered cars.

That electric vehicles are “simpler” than internal combustion engine (ICE) vehicles has long been a talking point for electric vehicle fans and evangelists (aka EVangelists). This has especially come into play when it comes to reducing maintenance costs. There are not all the belts, tubes, hoses, etc. found in a gasoline-powered motorcycle. This means fewer parts that can break and less maintenance over time. What’s less discussed is what Jim Farley pointed out this week – that it also means simpler production and a smaller workforce making the cars and trucks of the world.

Interestingly, Farley is also taking advantage of this difference to bring Ford back to more vertical integration. Rather than laying off workers, Farley aims to retrain them to produce more parts within Ford’s walls. As Farley says, “we need to internalize, so everyone has a role in that growth.” Nevertheless, it is not easy and it will certainly not be 100% smooth. Farley noted that the transition to electric vehicles would involve “storm clouds”. Recall that Ford aims to reach 50% of electric vehicle sales by 2030, compared to only a few percent in 2022. This massive transition offers the opportunity for a new approach and recycling, but also many obstacles and likely challenges.

The FT pointed out that in Henry Ford’s day, vertical integration was the name of the game. owned a forest, iron mines, limestone quarries and even a rubber plantation in Brazil to fully control the company’s supply chain,” the media said. output indicated. “If Henry Ford was coming back to life, he would have thought the past 60 years weren’t so exciting, but he’d love it now because we’re totally reinventing the business,” Farley said. It’s hard to know what Henry Ford would think right now. It’s a different era with different technology. It also recalls the fact that his wife owned a car from another brand because she, like many women at the time, preferred to drive electric. Electric cars were a big part of sales at the time, but eventually died out when longer-range gas-powered cars and the electric starter drove the non-electric portion of the EV market away.

Naturally, while discussing insourcing and vertical integration, Farley focused a bit on batteries – certain parts of the battery production process are where jobs could be added and workers could be retrained. Additionally, since he was speaking at a diversity and equity-focused event sponsored by the Rainbow Push Coalition, he focused some of his remarks on achieving greater equity and inclusion. He told Jesse Jackson: “We have a whole new supply chain to roll out, in batteries, motors and electronics, and diversity needs to play an even bigger role in that.”

At the end of last year, 2021, Ford had 183,000 employees. In August, he reduced that number by about 3,000 in a single round of layoffs. Undoubtedly, more layoffs will occur, probably even in 2023.

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