Ford Motor plans two major cost-cutting measures -- pause production of the F-150 Lightning electric pickup truck from mid-November until early next year and reduce manager bonuses -- as the company navigates losses in its electric car business.
The Rouge Electric Vehicle Center in Detroit, which is already on one shift, will be shut down for seven weeks from Nov. 18 to Jan. 6, which includes the scheduled holiday break at the end of the year, the Dearborn automaker announced Thursday.
During this period, about 730 hourly workers at the plant will be put on temporary layoff, the automaker stated, while adding that not all the workers will be off for the whole time of the shutdown, CNBC reported.
The decision comes as the sales growth of electric vehicles has fallen short of expectations, primarily due to higher costs and cautious consumer adoption.
"We continue to adjust production for an optimal mix of sales growth and profitability," a Ford spokesperson stated.
Earlier this week, Ford announced third-quarter net income of $900 million, or 22 cents per share, which included a $1 billion charge related to the cancellation of a planned three-row electric SUV, according to Reuters.
As part of its strategy to scale back on electric vehicle plans, Ford announced in August it is canceling a planned three-row electric SUV and delaying the launch of a new electric version of its best-selling F-150 pickup. Instead, the company plans to invest more in hybrid vehicles, which combine an electric motor with a gasoline engine.
Even though sales of the F-150 Lightning have gone up by 86% this year, the company is still losing money on the truck and has been providing subsidies to boost sales. The company rewards the dealers up to $1,500 for every 2024 F-150 Lightning they order from Ford's new regional electric vehicle distribution centers.
During a town hall meeting on Wednesday, CEO Jim Farley announced reductions to manager bonuses, which are tied to the company's goals of improving quality and reducing costs. He indicated that bonuses would be cut to 65% of their total, Reuters reported.
"I'm proud of the progress we've made, but we are not fully satisfied," Farley stated during the third-quarter earnings presentation earlier this week.
A Ford spokesman said on Thursday, "When we meet or exceed our targets for those factors – and we achieve the ambitious goals of Ford+ - the team is rewarded. We are focused on lowering our costs, improving our quality and making Ford a higher growth, higher margin, more capital efficient and more resilient business."
The spokesman further said that bonuses might be adjusted based on the company's fourth-quarter performance.
Early this week, Ford announced that its Model e EV operations are expected to incur losses of around $5 billion this year. Ford executives emphasized that the next generation of electric vehicles will be more affordable and that they will only launch a product if it can become profitable within a year.
Following the announcement that the company would only meet the lower end of its annual guidance, Ford's shares fell over 10% on Tuesday, and by Thursday afternoon, they were down 1.3%, trading at $10.34.
Ford had announced to cut production of the F-150 Lightning to one shift in April this year.
