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 plus a battery and electric motor. The company aims for its European passenger cars to 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.”
Rowley said that while tougher regulation is part of the reason for the shift, buyers also have shown increased appetite for electric vehicles.
“Consumers are rapidly moving in that direction,” he told CNN International’s Anna Stewart, adding that every electric offering sees “very strong demand.”
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. That figure includes $7 billion that the company had already spent from 2016 through the end of 2020.
The Europe factor
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 (F) will have catching up to do. German automaker Volkswagen, which announced an alliance with Ford (F) in 2019, is the leader in electric vehicle sales in Europe. Global electric car leader Tesla (TSLA) 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 it doesn’t currently sell any pure electric vehicles 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 comprising only 7% of European car sales overall, it’s a leader for Europe’s commercial vehicle sales sector.
Still, Ford is predicting that only 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. General Motors recently announced it is shooting to sell only emission-free vehicles by 2035.
Electric vehicles are expected eventually to be cheaper to produce than traditional gasoline-powered cars, thanks 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.