French Car Company Cuts 10,000 Jobs to Smooth Electric Vehicle Transition

A large European car component manufacturer is seeking 500 million euros ($538 million) cuts in four years as it foresees difficult conditions ahead because of the transition to electric vehicles (EVs) and greater competition from Chinese imports.

Forvia, which was founded last year in a merger of Faurecia and German competitor Hella, is to invest in artificial intelligence and cut 10,000 jobs from factories in European states including France, Germany, Poland, the Czech Republic, and Spain. While presently in profit, the car parts maker is in debt and foresees difficult tradition conditions ahead, reports French broadcaster BFMTV.

Worry about the future comes from the push to move Europe towards driving electric cars. Bloomberg reports the cuts are to “better compete in EV transition”  and to face the rising number of Chinese imports that are flooding the European car market.

A large part of Forvia’s business is making car exhaust systems, demand for which could be expected to fall if the share of EVs in the new car sales market rises.

The five year plan sees 10,000 job cuts — 13 per cent of its present workforce — and intends to make the company less dependent on China too. Part of the “EU-Forward” profitability plan for the company is to ” accelerate the deployment of Artificial Intelligence within the Group, with a view to optimizing investments and R&D costs as well as program management”.

The business plan anticipating a massive shift to electric comes as car dealers slash electric vehicle prices to try and shift unsold stock. As reported, buyers appear to be increasingly turning their backs on EVs in some markets as high purchase costs — pushed by evaporating government subsidy — and poor charging infrastructure makes the tech seem less appealing.