Ford Mustang Mach-E Insourcing Results In Supplier Lawsuit

Roughly two years ago, Ford CEO Jim Farley noted that the automaker planned to begin building more of its EV-related parts in-house, a move that the executive said would save the automaker money and help save jobs – a noteworthy admission, given the fact that all-electric vehicles aren’t as labor intensive to produce and don’t require as many people to assemble as ICE models. That later came to fruition earlier this year, when The Blue Oval announced that it would begin building Ford Mustang Mach-E drive units at the Irapuato Electric Powertrain Center (IEPC) in Mexico – a decision that’s now gotten the company in a bit of hot water.

According to Crain’s Detroit Business, tier two supplier VCST Industrial Products – which is based in Belgium – filed a lawsuit in the U.S. District Court for the Eastern District of Michigan against Ford supplier BorgWarner Inc. earlier this year following the automaker’s “sudden” decision to insource driveline production for the Mach-E. VCST is reportedly seeking $28 million in damages. Back in August, a judge granted BorgWarner’s motion to dismiss the case, noting that it should be taken up in Mexico City, but VCST did appeal that decision.

According to the lawsuit, BorgWarner contracted VCST to make pinions for its integrated drive module after it won the contract to produce drive units for the Mach-E. The company began supplying those units back in 2019, and in 2022, received a new contract to build an additional one million pinions each year for seven years. As such, VCST proceeded to invest $16.8 million to upgrade its tooling and machinery to support that effort.

However, in late 2023, BorgWarner canceled its program with VCST “due to Ford’s ‘sudden’ in-sourcing of that program in house,” the lawsuit claims. “(BorgWarner) knew and understood that VCST could not supply the more than six-fold increase without undertaking significant additional investment and capital expenditure.”