Dismal electric car sales have reportedly forced German car parts giant ZF Friedrichshafen AG to cut jobs. The layoffs are in response to “the changes in the mobility sector, particularly in the field of electromobility.”
“The number of employees in Germany is to be successively reduced by 11,000 to 14,000 from the current level of around 54,000 by 2028,” ZF announced, according to a report by France 24.
The decision to make the cuts — which consist of a fifth to a quarter of its employees in Germany — was made in order to “respond to the changes in the mobility sector, particularly in the field of electromobility” as the supplier struggles to adjust.
ZF CEO Holger Klein reportedly called the job cuts “difficult but necessary.”
“The seriousness of the situation calls for decisive action to be able to adapt the company to the tougher market and competitive environment,” Klein said.
The CEO added that ZF needed to be restructured in order to “strengthen our competitiveness and consolidate our position as one of the world’s leading suppliers.”
Klein went on to cite strong competition from foreigners, cost pressures, and weak demand for electric vehicles as reasons why the company needed to restructure its electric motors division, France 24 reported.
Chinese manufacturers, which Klein noted have been “highly competitive,” have surpassed others in the rising EV market.
The ZF CEO added that creating motors for electric vehicles produced “low margins,” and that the company has been struggling to “cross-finance purely electric drives” from its conventional and hybrid vehicle initiatives.
Moreover, switching to EVs was eroding demand for “transmissions for conventional and hybrid vehicles,” an area in which German manufacturers typically do very well.
Concurrently, the present “glaring weakness in demand for purely electric vehicles” caused ZF to be left with an excess of production on areas that had strong investments.
Klein nonetheless claimed “the future belongs to electromobility,” and vowed to continue investing “heavily in this area.”
The European Union, meanwhile, is trying to outlaw sales of new fossil fuel-powered vehicles by 2035, which will reportedly render some jobs in the industry redundant.
In addition to ZF, other German companies in the industry, such as Bosch, Continental, and Webasto, have also announced job cuts.
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