The announcement undoubtedly resonated strongly on every floor of Ford’s. (F) headquarters in Dearborn, Michigan.
This unexpected news certainly caught CEO Jim Farley and his team by surprise as they work to close the gap created by Tesla. (TSLA) in the highly competitive and profitable electric vehicle market.
Farley became Tesla Ford’s number one rival. From this rivalry, the CEO wants to emerge as the big winner. To do that, he decided to transform Ford from a traditional automaker into something between a startup and a big company. This involves removing a lot of redundancy and simplifying the decision-making process. In a word, Ford wants to drastically reduce its costs.
“We have a lot of people,” Farley said at a Wolfe Research automobile conference in February. “This management team firmly believes that our [internal-combustion-engine and battery-electric vehicle] wallets are earning little.”
He also said the company needs to cut $3 billion or more in costs from its business 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
Cost cuts are not arbitrary, but strategic, to make the business more competitive from now on, says Ford. This cost reduction will lead to the cutting of several thousand salaried jobs, a source told TheStreet last month.
Ford has separated its internal combustion engine (ICE) vehicle manufacturing activities, or gasoline cars, from its battery-powered vehicle (BEV) operations.
It is in this context that an ultra unfavorable verdict falls on the company. A jury has just sentenced Ford to pay $1.7 billion in connection with a fatal accident that killed a couple in Georgia in 2014, said Gerald Davidson of Mahaffey Pickens Tucker, LLP, one of the attorneys representing the company. family, to TheStreet by email.
“We hope the verdict of this courageous jury will have the impact it was intended for and Ford will do something about the millions of these super utility trucks built between 1999 and 2016 that are still on the road,” said Davidson.
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The jury ruled that Ford sold 5.2 million “Super Duty” trucks with weak roofs that would crush people during rollovers, the Atlanta-Journal Constitution reported. The fault was present on all “Super Duty” models between 1999 and 2016.
The jury 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 first tried in 2018 but concluded with a mistrial.
“While our condolences go out to the Hill family, we do not believe the verdict is supported by the evidence,” a Ford spokesperson reacted in an emailed statement.
For will appeal the verdict, the spokesman added.
$24 million compensatory
It is not certain that this huge sum will be the final value. Indeed, judges and appellate courts often reduce punitive damages when considering ultra-large amounts, 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 split, causing the vehicle to roll over and crush the roof of the vehicle.
The Hill family accused Ford of having always known that the roof design of this 2002 model year pickup would not protect the vehicle’s occupants in the event of a rollover. The roof design was faulty, the family claimed. They also said that Ford was aware of the dangers of roof crushing for many years, but did not act to fix it.
Ford reportedly failed to notify F-250 owners about the weak roof. Therefore, the automaker must take responsibility for the fatal accident of their loved ones.
The jury seems to have sided with them.
The day before, jurors awarded the Hill family $24 million in compensation for the incident.