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Illustration: Sarah Grillo/Axios

Carmakers are in a tough spot: Global auto sales are slowing faster than they can reinvent themselves as transportation service providers.

Why it matters: It will be years before investments in new technologies like electric, self-driving cars pay off — if ever. With sales stagnating in major markets like the U.S. and China, and traditional sources of revenue drying up, carmakers are slashing fixed costs and contemplating their place in the new order.

Driving the news: Ford is the latest automaker to announce layoffs, this time in Europe, as part of a broader corporate restructuring that aims to slash $25.5 billion in operating costs over the next few years.

  • Ford said it would cut 12,000 jobs, close 5 plants, and trim shifts at 2 other factories throughout Europe.
  • The announcement follows news in May that it would eliminate 7,000 salaried positions worldwide.
  • Ford is hardly alone. GM, Nissan, Honda, Daimler, Tesla, Fiat Chrysler, Jaguar Land Rover and Audi have all announced job reductions in the past 6 months, totaling at least 38,000 people, Bloomberg reports. And more cuts are likely.

What they're saying: "The industry is right now staring down the barrel of what we think is going to be a significant downturn," Bank of America Merrill Lynch analyst John Murphy said at a recent Detroit forum, adding that the pace of decline in China "is a real surprise," per Bloomberg.

  • The timing couldn't be worse, just as companies are ramping up spending on new technologies — $225 billion on electrification between now and 2023, and another $85 billion on autonomous vehicles, says global consulting firm AlixPartners.
  • Industry profits began falling in 2017, and return on capital employed is shrinking toward levels not seen since the Great Recession, a studyfrom the firm found.
  • Mark Wakefield, co-leader of AlixPartner's automotive and industrial practice, warns of a "multi-year profit desert" the industry will have to crawl through.

What to watch: In the midst of the turmoil, automakers need to figure out what role they will play in the new transportation ecosystem, Wakefield tells Axios.

  • The largest players will likely continue to invest heavily in EVs and AVs in hopes of dominating the field in a winner-take-all fight, he says.
  • Others will be more strategic, putting together pieces of the mobility puzzle with partnerships but not controlling the game.
  • "Your starting position matters," Wakefield says. "Big OEMs want to play a bigger role. Smaller companies are willing to sell pick axes to gold miners."

Go deeper: Billion-dollar bets on electric vehicles await payoff

Go deeper

45 million Americans under winter storm watches near New England

Computer model projection showing the winds moving around the powerful East Coast storm on Saturday Jan. 29, 2022. Image: https://earth.nullschool.net

Nearly 45 million Americans are under winter weather alerts and warnings from North Carolina to northeastern Maine, as a major winter storm threatens the region.

Why it matters: It is predicted to be the biggest blizzard since 2018 to strike the Northeast with more than 2 feet of snow possible in parts of eastern Massachusetts, according to the National Weather Service.

3 hours ago - World

Australian PM pledges $700M for climate change-threatened Great Barrier reef

A green sea turtle is flourishing among the corals at Lady Elliot island in Australia's Great Barrier Reef. Photo: Jonas Gratzer/LightRocket via Getty Images

Australian Prime Minister Scott Morrison announced Friday a AU$1 billion ($703 million) investment plan for the Great Barrier Reef.

Why it matters: The nine-year plan for projects including water quality improvement, reef conservation and supporting some 64,000 tourism jobs comes months ahead of this year's federal election. It has been criticized by scientists and environmental groups for failing to tackle climate change.

Judge nixes Gulf of Mexico oil leases in climate-focused ruling

Tug boats prepare to tow the semi-submersible drilling platform Noble Danny Adkins through the Port Aransas Channel into the Gulf of Mexico on December 12, 2020 in Port Aransas, Texas. Photo: Tom Pennington/Getty Images

A federal judge on Thursday canceled the Biden administration's late 2021 sale of new oil-and-gas drilling leases in the Gulf of Mexico.

Why it matters: The ruling that the greenhouse gas emissions analysis by the Interior's Bureau of Ocean Energy Management (BOEM) was insufficient is a win for green groups that challenged the decision, as they seek to curb fossil fuel production.