Köln/München – Ford is facing significant challenges. In the second quarter of 2024, the American automaker reported a further decline in both revenue and profit. Reflecting this economic downturn, Ford’s stock prices have plummeted. Adjusted earnings per share fell from 72 cents to 47 cents. Like many of its competitors, Ford is struggling with low profitability in the electric vehicle (EV) sector.
Ford manager issues stark warning to combustion engine supporters
Gunnar Herrmann, Chairman of Ford Germany’s Supervisory Board, has a clear message for proponents of combustion engines and warns of the consequences of sticking with this technology: “If you believe in prosperity, growth, and the future, then please, leave the targets as they are!” Herrmann said in an interview with Bild, referring to the EU-wide ban on new gasoline and diesel cars starting in 2035.
Herrmann, who has been with Ford since 1979, directed his comments towards politicians and automotive managers who question the end of gasoline and diesel engines and dream of continuing operations with synthetic fuels. He criticizes this stance as a sign of lacking strategy, stating: “Such demands could only be based on having no strategy or being in a dire situation, praying to God that you can continue with the old stuff.”
Ford’s E-Mobility Center falls short in Germany
Despite Ford opening a new E-Mobility Center in Cologne last year, the company sells very few electric vehicles in Germany. Herrmann describes the current production as “homeopathic” and says the existing capacities are insufficient to justify a full plant operating in two shifts.
The entire German auto industry is in a tough spot with stagnating sales. In the first half of the year, BEV (Battery Electric Vehicle) sales in Germany plummeted by 16.5%, and Ford is reportedly losing over €100,000 on each electric vehicle sold. Despite the current market difficulties, Herrmann does not see delaying the planned combustion engine ban in the EU as a solution. Instead, he calls for faster action in electrification: “Speed is key, and stop debating. Look ahead, and consult some visionaries in the industry,” the 64-year-old stated.
Chinese manufacturers pose a threat
Herrmann also warns about the consequences of the “stagnation we have maintained,” seeing a risk that China could take the lead in electric vehicles: “If you want to endanger the locations, that is the way to push them onto a slippery slope, simply by halting development. Then the cars will come from China.”
According to Herrmann, Chinese automakers are expected to “soon” establish plants in Europe, which would be “another beginning of the end” for local manufacturers. Interestingly, it was Ford itself that expanded to Europe in the 1920s, becoming a major institution with significant locations and numerous jobs over the decades.
Ford’s financial troubles with electric vehicles
Ford’s challenges in the electric vehicle sector involve substantial financial burdens. The shift from combustion engines to electric drives is proving costly for Ford. The company reported a loss of $1.14 billion in its electric vehicle segment for the past quarter. For the entire year, Ford expects an operational loss of $5 to $5.5 billion in the electric vehicle business.
While electric vehicles struggle, hybrid vehicles are gaining popularity. Despite these challenges, Herrmann remains optimistic and urges confidence: “There is nothing we cannot do! We can do it, and we can do it with a reasonable cost structure.” He views electrification as the only way to meet climate goals. Herrmann’s message is clear: sticking with old technologies risks ruin.
Ford’s financial instability threatens more jobs
The European auto industry faces the challenge of navigating the transition to e-mobility or losing market share. Ford’s financial strain indicates that this transition is fraught with risks. Recent statements from managers suggest that the next generation of electric vehicles will only hit the market when they become profitable. This strategy will likely impact employment, as the company has recently announced.
In 2023, Ford cut 5,000 jobs in Europe, with the majority in Germany (2,300), the UK (1,300), and Spain (1,100). The company then announced plans to reduce the number of models developed for Europe to focus on electric vehicles and the profitable commercial vehicle segment.
