Business

Ford is investing $1 billion in Germany as it goes electric in Europe

Posted February 17, 2021 5:11 a.m. EST

— Ford is spending $1 billion to modernize a plant in Germany as part of a plan to sell only electric passenger cars in Europe by 2030.

The factory in Cologne, Germany will be overhauled to produce the US carmaker's first European-built, mass volume all-electric passenger vehicle starting in 2023, according to the company.

Ford said that by mid-2026, all of the passenger cars it sells in Europe will be either all-electric or plug-in hybrid vehicles that have both an internal combustion engine as well as a battery and electric motor. It said it will move to have its European passenger cars be all-electric by 2030.

"We successfully restructured Ford of Europe and returned to profitability in the fourth quarter of 2020," said Stuart Rowley, president of Ford of Europe. "Now we are charging into an all-electric future in Europe."

Ford announced earlier this month that it would invest at least $22 billion worldwide through 2025 to build electric vehicles, nearly twice what the company had previously committed to spend.

Europe has imposed aggressive targets to reduce greenhouse gas emissions from vehicles, and carmakers face huge potential fines if they do not comply. That has helped the continent pace ahead of the United States on adoption of electric vehicles.

About 10% of the car industry's sales in Europe were pure electric in December, Ford CEO Jim Farley said during a recent conference call. And electric vehicles made up 54% of car sales in Norway last year, the first country to have more than half its auto sales be battery-powered vehicles.

Ford will have catching up to do. German automaker Volkswagen, which announced an alliance with Ford in 2019, is the leader in electric vehicle sales in Europe. Global electric car leader Tesla is building its first European factory outside of Berlin, which is due to open later this year.

Ford just recently started deliveries of the Mustang Mach-E electric vehicle in the United States, and doesn't currently have any pure electric vehicles for sale in Europe. But the Mach-E is due in European showrooms soon and Ford has more electric vehicles in the pipeline, including the E-Transit commercial van, due in US dealerships late this year and in Europe in early 2022. The E-Transit will be particularly important for Ford. Despite having only 7% of European sales overall, it is a leader in commercial vehicle sales in Europe.

But Ford is only predicting that two-thirds of its commercial vehicle sales will be all-electric by 2030, rather than the 100% goal it has set for passenger cars.

Virtually all automakers are making major pushes to convert from traditional internal combustion engine cars to pure electrics, both to meet increasingly tougher environmental regulations around the globe and to answer the growing appetite for electric among car buyers. General Motors recently announced it is shooting to sell only emission-free vehicles by 2035.

It is also expected that the electric vehicles will eventually be cheaper to produce than traditional gasoline powered cars, due to fewer moving parts and thus less need for labor to assemble them. Ford estimated in 2017 that it would need 30% less labor to build electric vehicles than gasoline powered cars.

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