Olivia Cavallaro Auto 07.22.2022 21:Jul PM EDT

Ford Will Reportedly Lay Off 8,000 Employees in Order to Fund EV Expansion

The Michigan-headquartered automobile manufacturer is reportedly slicing off one-fourth of its workforce to focus on electrification.

Amidst the increasing demand for electric vehicles or EVs, Ford is preparing to lay off up to 8,000 salaried workers or about one-fourth of its current workforce in the US, reports say. The Blue Oval is hoping to reduce $3 billion in operational costs by 2026 to help fund its push into manufacturing electric vehicles.

According to The Verge, Bloomberg reported that while the Ford layouts have not been finalized and may still change, the 119-year-old automobile manufacturer is looking to slice off its workforce from Ford Blue, the company's legacy internal combustion engine business.

In 2021, Ford split into two entities, namely Ford Blue, which covers ICE vehicles, and Ford Model E, which is focused on electric vehicles and software projects. The company said at the time that Ford Blue would generate the revenue for Ford Model E to continue developing and innovating new products.

Ford is made up of about 31,000 workers in the US, and around 8,000 are in danger of losing their jobs in the face of an impending recession.

Auto Manufacturer CEO Did Not Deny Ford Layoffs for Shift to Electric Vehicles

On Thursday morning, Ford CEO Jim Farley sent a video message to employees in which he did not deny the layoffs report, Newsweek reported. In it, Farley addressed plans that Ford was looking to cut 8,000 employees in North America and did not deny the rumors.

Farley allegedly said in the video message that reports on the Ford layoffs were creating high anxiety and that the company needed to reduce structural costs in order to compete in the market. Ford spokesperson Mark Truby told the Detroit Free Press that he could not confirm the Bloomberg report on the layoff of 8,000 employees.

The news comes after Michigan awarded Ford a $100 million tax-funded incentive package in June as part of a plan to provide more jobs in the state. Farley previously expressed plans to reduce billions in costs by 2026 and transform Ford Blue into "the profit and cash engine for the entire enterprise."

Who will be affected by the Ford Layoffs?

Bloomberg's report revealed that the Ford layoffs will affect several operational functions in the automotive manufacturer's white-collar workforce and may be rolled out in phases. The Ford layoffs will likely begin this summer, with most of the cuts occurring in the US.

Ford spokesman T.R. Reid said in an email to DFP that the company is "reshaping our work and modernizing our organization across all of the automotive business units and the entire company." In April, the company cut 580 engineering jobs and earlier this month, followed by a layoff of about 150 workers in Ford's driverless startup called Argo AI.

Back in March, Farley increased Ford's EV spending from $30 billion to $50 billion through 2026. He also announced a plan to build two million electric vehicles annually beginning in 2026. In 2021, the company sold 27,140 EVs.

Farley admitted in February's Wolfe Research auto conference that Ford was overstaffed and that workforce reduction is key to increasing profits.