Ford Adjusts European EV Production Amid Lower Demand, Announces Job Reductions

Ford Reduces European EV Workforce and Production

Ford Motor Co. has announced plans to reduce its workforce by up to 1,000 jobs at its electric vehicle (EV) plant in Cologne, Germany, effective January 2026. The automaker will also transition the facility from a two-shift to a single-shift operation. This strategic adjustment comes as Ford confronts demand for battery-powered cars in Europe that remains "well below industry forecasts."

Details of Operational Adjustment

This decision marks a significant recalibration for Ford's European EV strategy. The Cologne plant, which produces the electric Explorer SUV, was the recipient of approximately $2 billion (2.3 billion euros) in investment aimed at transforming it into a dedicated EV production hub. The anticipated surge in demand for low-emission vehicles, however, has not materialized at the expected pace. Ford plans to manage the job reductions through voluntary departures and buyout packages, mirroring a managed approach to workforce restructuring seen in prior announcements. This latest round of cuts follows broader restructuring plans announced in November 2024, which targeted 4,000 job reductions across Europe and the UK, with 2,900 of those in Germany.

Underlying Factors in European EV Demand

The primary driver for Ford's operational change is the slower-than-expected adoption rate of EVs in Europe. While industry analysts had projected EV registrations to reach 35% of new car sales by the end of 2025, current data indicates that electric vehicles accounted for 15.6% of new car registrations in Europe through July 2025. Experts now anticipate a more modest 20% market share by year-end 2025. Factors contributing to this subdued growth include the high upfront costs of EVs, a perceived lack of adequate charging infrastructure, and the withdrawal of purchase subsidies in key markets like Germany. The European Automobile Manufacturers' Association (ACEA) has noted that the current market share for EVs is "far from where it needs to be at this point in the transition." Despite these challenges, overall vehicle sales for Ford in Europe increased by 0.7% to 260,000 units in the first seven months of 2025, maintaining a 3.3% market share.

Broader Market Implications and Strategic Shifts

Ford's situation in Cologne underscores a broader challenge facing traditional automakers navigating the EV transition in Europe. Companies like Volkswagen and Stellantis are also implementing job cuts and cost-reduction measures amid intense competition, particularly from Chinese manufacturers, and persistent pricing pressures. The "almost perfect storm" described by analysts at UBS Group for the automotive industry includes slowing demand, potential tariff risks, and the significant investment required for EV technology despite uncertain consumer uptake. The flexibility granted to manufacturers to meet EU CO2 targets over three years (2025-2027), rather than solely in 2025, may also contribute to a less aggressive push for immediate EV sales targets. This environment suggests that the transition to electric vehicles in Europe is proving more gradual and complex than initially projected, requiring automakers to adjust their production capacities to align with actual market demand.

Outlook for the European Automotive Sector

Looking ahead, the European automotive sector is expected to continue grappling with these headwinds. The emphasis will remain on aligning production with consumer demand, managing significant capital investments in EV technology, and navigating evolving regulatory landscapes and consumer preferences. The pace of charging infrastructure development and potential shifts in government incentive programs will be critical factors influencing EV adoption. For Ford, strategic adjustments, including a focus on budget EV models in other markets, indicate a recalibration of its global EV ambitions. Investors will be closely monitoring how major automakers balance their long-term electrification goals with the immediate realities of market demand and profitability in a highly competitive and uncertain economic environment.