Ford to Invest Up to 4.4 Billion Euros in German Subsidiary

Impact of the German Government's Suspension of EV Subsidies
Sluggish Demand in Germany and Across Europe
Ford Werke Invests in Future Growth Engines

Ford Motor Company plans to invest up to 4.4 billion euros (6.96 trillion won) in its German subsidiary, Ford Werke, according to a report by Nihon Keizai Shimbun (Nikkei) on the 11th. The purpose of this capital injection is to continue restructuring and strengthen competitiveness in the European market.

Ford's Chief Financial Officer (CFO), John Lawler, explained on the 10th (local time), "To succeed in Europe in the long term, it is necessary to simplify the organizational structure while reducing costs and improving efficiency." This is interpreted as Ford's commitment to supporting the growth of its German subsidiary.

Ford, which has its European headquarters in Cologne, Germany, began a major restructuring in 2023. At that time, Ford announced plans to reduce its European workforce by 3,000 employees, followed by a declaration in November last year to cut 2,700 employees at its German subsidiary by the end of 2027.

This move comes as a response to the slump in demand within Germany after the German government discontinued electric vehicle (EV) purchase subsidies in December 2023. The situation in the European market is also challenging. Ford has recorded losses in the European market for several years and is reducing its product lineup and focusing on profitability to address the slowdown in demand. According to the European Automobile Manufacturers Association (ACEA), Ford's new car sales in 31 major European countries in January fell 12% compared to the same month last year, totaling 31,000 units.

The main target of the restructuring in Germany is the Cologne plant. This plant produces the SUV electric vehicles Explorer and Capri. The new EV Puma Gen-E, scheduled to be delivered in Europe starting this spring, will be produced not at the Cologne plant but at a lower-cost facility in Romania.

Ford Werke plans to use part of this funding to secure future growth engines. It intends to invest 2 billion euros to upgrade the EV production facilities at the Cologne plant, with the total amount, including restructuring costs and debt reduction, expected to reach up to 4.4 billion euros.