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Are EVs Sparking a Manufacturing Job Loss?

Greg Heilers headshotWords by Greg Heilers
Investment & Markets
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The movement to electrify vehicles may improve local air quality and decrease greenhouse gas emissions, but does it help workers? As the New York Times recently reported, there is another story unfolding within this shift across the automotive sector. Around the world, the rise of electric vehicles (EVs) is spelling trouble for manufacturers of parts for combustion engine-powered vehicles.

With each factory’s shuttering goes hundreds to thousands of jobs. In Germany, where the automotive industry is the country’s largest, workers are already feeling this impact. In the U.S., these losses are right around the corner.

EVs spark job losses in Germany

The German automotive manufacturer Mahle, for example, has commenced the shutdown of its factory in Öhringen which, when complete by the end of 2020, will see the loss of 240 local jobs. If that seems small, it’s only a drop in the bucket: Automotive brands such as Daimler and Audi, and suppliers Bosch and Continental, have all announced thousands of job cuts.

The president of the German Association of the Automotive Industry, Bernhard Mattes, explained that the “transition toward more electric vehicles that have far fewer components and are easier to manufacture” will result in a loss of 70,000 jobs in Germany by 2030. That number may be larger, as the loss of temporary contract workers often goes unreported.

IG Metall, the German autoworkers’ union, concurs. The union’s leadership estimates a loss of 75,000 engine and transmission manufacturing jobs by 2030.

Pulling the plug on American jobs

Even retraining workers who build combustion-powered automobiles may not be of use. The Congressional Research Service (CRS) recently issued a report detailing effects of the switch to EVs. “Of the nearly 590,000 U.S. employees engaged in motor vehicle parts manufacturing, about one-quarter—nearly 150,000—make components for internal combustion powertrains,” the report reads. 

One contributor to the CRS report, vehicle-industry analyst Bill Canis, warned of the effects of switching to an electric powertrain: Fewer parts means less labor. While Canis advocates using the Workforce Innovation and Opportunity Act to retrain workers, there may not be enough work to go around.

Conventional powertrains have as many as 2,000 moving parts, whereas electric powertrains can have as few as 20. Canis acknowledged that though the 150,000 “workers who today manufacture parts for gasoline or diesel engines could be retrained… there may be significantly fewer such jobs than exist in automotive supply chains today.”

Job losses to accelerate

The effects may grow larger still. According to one German manufacturer riding the electric wave to prosperity, the largest players in the industry have yet to begin transitioning. Ziehl-Abegg manufactures an innovative propulsion unit for buses that is embedded inside wheels, eliminating the need for a gearbox and saving energy due to reduced friction.

But Ziehl-Abegg’s automotive managing director, Ralf Arnold, said: “What’s still missing is one of the big players. They are very cautious. They live in their own world.”

In America, that rings true. Brett Smith, director of research for the Center for Automotive Research, stated that large manufacturers of combustion-powered engines and powertrains are disincentivized to keep production local. Electric motors and lithium-ion batteries add less value to electric cars than internal-combustion engines due to conventional cars, he explained.

“Does it make sense for GM to build their own electric motors? Not as much sense as it did to make their own internal combustion engines," he told CNN last month. 

If larger automakers have yet to take action on a massive scale, that may protect automotive manufacturing jobs for the near-term. But when they do switch gears and catch up to speed, automotive jobs may stall on a large scale.

Image credit: Tim Mossholder/Unsplash

Greg Heilers headshotGreg Heilers

Greg Heilers writes on green business and sustainability for private clients and top publications. After graduating from university, he had the privilege to learn from opportunities in France, Palestine, Scotland, Guatemala and the USA. Today, he lives in the San Francisco Bay Area, and enjoys any chance he gets to garden or hike.

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