Ford Dealt a Huge Blow

The announcement no doubt resonated strongly on all floors at Ford’s  (F)  headquarters in Dearborn, Mich.

This unexpected news has certainly taken CEO Jim Farley and his team by surprise as they work to close the gap created by Tesla  (TSLA)  in the highly competitive and lucrative electric vehicle market.

Farley made Tesla Ford’s number one rival. From this rivalry, the chief executive officer wants to emerge as the big winner. To do this, he decided to transform Ford from a legacy automaker into a kind of company in between a startup and a big firm. 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 too many people,” Farley said at a Wolfe Research auto conference in February. “This management team firmly believes that our [internal-combustion-engine and battery-electric vehicle] portfolios are underearning.”

He also said that the company needs to pare $3 billion or more costs out of 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 U.S in 2021.  

A $1.7 Billion Verdict

The cost cuts are not arbitrary, but rather strategic, to make the business more competitive beginning now, Ford says. This cost reduction will lead to the cut of several thousand salaried jobs, a source told TheStreet last month.

Ford has separated the manufacturing activities of internal combustion engine (ICE) vehicles, or gasoline cars, from the operations of battery powered vehicles (BEV).

It is in this context that an ultra unfavorable verdict falls on the company. A jury has just ordered Ford to pay $1.7 billion in connection with a fatal accident that killed a couple in Georgia in 2014, Gerald Davidson from law firm Mahaffey Pickens Tucker, LLP,  one of the attorneys representing the family, told TheStreet by email.

“Hopefully the verdict of this courageous jury will have the impact for which it is intended and Ford will do something about the millions of these super duty trucks manufactured between 1999 and 2016 that are still on the road,” Davidson said.

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The jury determined 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 flaw was present in all “Super Duty” models between 1999 and 2016.

The jury reached this verdict on Aug. 19 after a three-week trial. The punitive damage is reportedly the largest in Georgia history. The case was first tried in 2018 but concluded with a mistrial.

Ford did not immediately respond to a request for comment.

$24 Million Compensatory

It is not certain that this huge sum will be the final amount. Indeed, judges and courts of appeal often reduce punitive damages when they consider the amounts to be ultra-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 flipped over and crushed the roof of the vehicle. 

The Hill family accused Ford of having always known that the design of the roof of this 2002 model year pickup would not protect the occupants of the vehicle if it were to roll over. The design of the roof was defective, the family claimed. They also said that Ford was aware of roof crush dangers for many years but didn’t act to fix it.

Ford reportedly did not notify F-250 owners of the weak roof. Therefore, the automaker should take responsibility for the fatal accident of their loved ones.

The jury seems to have sided with them.

The day before, the jurors awarded a $24 million compensatory to the Hill family for the incident.