The ICE division will, however, be the big moneymaker going forward.
A new report stating Ford is getting ready to cut 8,000 jobs to increase its profits has emerged. The profit gained from this move will then be pushed into the Blue Oval's EV operations.
Bloomberg spoke with a source within Ford who asked not to be named. The source is close to ongoing internal discussions and revealed that these jobs would be cut from the new Ford Blue unit and other salaried operations throughout the company. Ford currently has roughly 31,000 employees in the USA, where most of the cuts will be made.
In March this year, Ford's CEO, Jim Farley, split its operations. The Ford Blue division is in charge of traditional ICE vehicles, while the Model e division is responsible for EV operations.
Ford has made significant investments in its EV operations. In February 2021, it committed to spending $29 billion on electric and self-driving vehicles, followed by another $20 billion pledge a year later.
The EV industry has been good to Ford. Its fourth-quarter earnings from last year revealed that net income had gone up to $12.3 billion, which was a big step in the right direction from the $2.8 billion it lost the previous year. Of the $12.3 billion, $8.2 billion came from Ford's investment in Rivian, which went public in November 2021.
Despite these impressive figures, Farley wants to cut $3 billion in costs by 2026. Farley wants Ford Blue to be the cash engine for the entire operation, even though that's where most of the job cuts will come from. According to the insiders, the cuts are expected to be phased in this summer.
Ford's EV sales have increased by 77% compared to the first half of last year, thanks to the introduction of the F-150 Lightning. Unfortunately, EV profit margins are too narrow, and Model e is not making enough money. The rising manufacturing and warranty costs are too high, so cutting staff is the only viable option.
"We have too many people," Farley said at a Wolfe Research auto conference in February. "This management team firmly believes that our ICE and BEV portfolios are under-earning."
Ford did not comment on the job cuts, stating that it's focusing on reshaping the organization to capitalize on EV growth. "As part of this, we have laid out clear targets to lower our cost structure to ensure we are lean and fully competitive with the best in the industry," chief communications officer Mark Truby said in a statement.