The announcement no doubt resonated strongly on all floors of Ford’s (eat) headquarters in Dearborn, Mich.
This unexpected news has taken CEO Jim Farley and his team by surprise as they work to fill the void Tesla is creating (TSLA) in the highly competitive and lucrative electric vehicle market.
Farley made Tesla Ford’s number one rival. From this rivalry, the CEO wants to emerge the big winner. To do this, he decided to transform Ford from an old car company into a kind of company between a startup and a large company. This involves removing a lot of redundancies and simplifying the decision-making process. In short, Ford wants to drastically reduce its costs.
“We have too many people,” Farley said at a Wolfe Research automotive conference in February. “This management team strongly believes that our [internal-combustion-engine and battery-electric vehicle] portfolios earn less.”
He also said the company needs to cut $3 billion or more in costs from its operations by 2026. The company’s ambitious goal is to produce 2 million electric vehicles by 2026. It sold just 27,140 EVs in the US in 2021.
A $1.7 billion verdict
The cost cuts are not arbitrary, but rather strategic, to make the business more competitive starting now, Ford says. That cost-cutting will result in several thousand salaried jobs being cut, a source told TheStreet last month.
Ford has separated its internal combustion engine (ICE) or gasoline vehicle manufacturing operations from its battery electric vehicle (BEV) operations.
It is in this context that an extremely unfavorable verdict falls on the company. A jury just ordered Ford to pay $1.7 billion in connection with a fatal crash that killed a Georgia couple in 2014, Gerald Davidson of the law firm Mahaffey Pickens Tucker, LLP, one of the attorneys, told TheStreet via email representing the family.
“Hopefully this courageous jury’s verdict will have the impact it is intended for and Ford will do something about the millions of these supercharged trucks built between 1999 and 2016 that are still on the road,” Davidson said.
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The jury found that Ford had sold 5.2 million “Super Duty” trucks with weak roofs that would crush people inside during rollovers, the Atlanta-Journal Constitution reported. The defect was present in all “Super Duty” models between 1999 and 2016.
The court reached this verdict on August 19 after a three-week trial. The punitive damage is reportedly the largest in Georgia’s history. The case was heard for the first time in 2018 but ended in a wrongful decision.
“While our condolences go out to the Hill family, we do not believe the verdict is supported by the evidence,” a Ford spokesman said in an emailed statement.
For will appeal the verdict, the spokesman added.
Compensatory $24 million
It is not certain that this huge amount will be the final amount. Indeed, judges and appellate courts often reduce punitive damages when they deem the amounts to be excessively large, as is the case here.
Melvin, 74, and Voncille Hill, 62, were driving a 2002 Super Duty F-250 Crew Cab pickup when a tire separated, causing the vehicle to overturn and crush the roof of the vehicle.
The Hill family accused Ford of knowing all along that the roof design of this 2002 model pickup would not protect the occupants of the vehicle in the event of a rollover. The roof design was flawed, the family claimed. They also said Ford had known about the roof crush hazards for many years but failed to act to fix it.
Ford reportedly did not notify F-250 owners about the weak roof. Therefore, the car industry should take responsibility for the fatal accident of their loved ones.
The jury seems to be on their side.
The day before, jurors awarded the Hill family $24 million in damages over the incident.