Ford chooses Spain factory to build 'profitable' EVs

Ford said Wednesday it will build its next-generation of electric vehicles for Europe at its plant in Valencia, Spain.

The automaker said it chose the Valencia factory over its facility in Saarlouis, Germany, for its ability to build profitable EVs that meet the demand of European customers, according to Ford. The company said that the factory could begin producing electric and connected vehicles later this decade.

The key word here is "profitable," meaning the company expects it will be cheaper to build EVs in Spain than at its German factory. A Ford spokesman said that “significant restructuring will be required” at the automaker's European operations but declined to comment further.

“Bringing our all-new electric vehicle architecture to Valencia will help us build a profitable business in Europe, secure high-value employment and increase Ford’s offering of premium electric, high performance, fully connected vehicles that meet the demand of our European customers,” Stuart Rowley, chair of Ford of Europe and the company’s chief transformation and quality officer, said in a statement.

Meanwhile, Ford’s plant in Cologne, Germany, will continue to serve as the European headquarters of the automaker’s battery-electric Model e business and the site of its first domestic European EV production. The automaker is also investing $2 billion in an electric vehicle center there, with production slated to begin late 2023.

Ford is making big bets on EVs worldwide, investing $50 billion toward its goal to sell 2 million EVs annually by 2026. The automaker plans to launch three new electric passenger vehicles and four new electric commercial vehicles in Europe in a bid to sell more than 600,000 EVs annually in Europe by 2026 on its way toward complying with the EU’s 2035 ban on producing internal combustion vehicles.

It's worth noting that the EU may not reach its lofty target by that deadline, according to Elmar Kades, the Munich-based global co-leader of AlixPartners' automotive and industrial practice.

“It is hard to believe that in the end, Europe will switch completely to an ICE (gas engine) ban,” Kades said. “Everybody knows that Europe is known for making compromises.”

Instead, EVs are likely to comprise just over 80% of the EU’s new vehicle market in 2035, according to the AlixPartners 2022 Global Automotive Outlook released Wednesday.