Ford Motor (NYSE:F) formalized the layoff of gasoline-powered auto designers in Europe. It will let go of 3,800 people, mostly in Cologne, Germany.
Unions reacted angrily to the move when it was hinted at last month. It comes as European automakers begin the switch to electric vehicles (EVs) to comply with a ban on sales of gas-powered cars in the E.U. starting in 2035.
Ford laid off 8,000 Americans working on gas-powered cars last year.
Walk Onto Electric Avenue
The layoffs underscore the lead Tesla (NASDAQ:TSLA) and Chinese EV companies have on the transition to electric cars.
A new Ford EV battery plant will be run by China-based Contemporary Amperex Technology (CATL). CATL dominates the market with a 37% market share. Meanwhile, Ford’s new plant in Kentucky is run by a Korean company, SK Innovation.
Tesla’s lead in batteries is reflected in its valuation. Tesla entered trade Feb. 14 with a market capitalization of $615 billion. Ford was worth $52 billion, and General Motors (NYSE:GM) had a market cap of $58 billion. Toyota Motor (NYSE:TM), the largest carmaker by volume, is worth $230 billion.
Tesla’s chief competition comes from China, where mid-market cars like the BYD (OTCMKTS:BYDDY) Song series outsell it. U.S. automakers are only now starting to deliver electrics affordable to the middle class, like the Chevrolet Bolt.
The American middle market has been slow to adopt electrics because of “range anxiety,” the fear of running out of electricity on a long trip. There are currently just under 47,000 electric charging stations in the U.S., but President Joe Biden’s administration wants there to be 500,000 by 2030.
The latest Bolt can go more than 200 miles on a single charge. The Tesla Model 3 can go more than 300 miles on a charge. But range decreases as a battery ages, which is why Chinese luxury EV maker Nio (NYSE:NIO) is pushing the idea of battery swaps at company-owned stations.
What Happens After Ford Layoffs?
No one should doubt Tesla’s lead, but speculation over the size of that lead will continue. The electric vehicle lane is going to get crowded and increasingly dominated by Chinese EV makers. The Ford layoffs show the company still has a ways to go to catch up to its competitors.
On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
