EV transition could cost 500,000 jobs, supplier group says

PARIS -- The transition to electric vehicles from internal combustion powertrains could mean the loss of up to 500,000 jobs at automotive suppliers in the EU by 2040, according to a new study by the industry trade group CLEPA.

Those job losses will not be fully offset by a corresponding growth in EV components, which the group said would generate only 226,000 new positions, for a net loss of 275,000 jobs.

That scenario could play out if the EU enacts a proposal in its "Fit for 55" package to allow only zero-emissions vehicles to be sold after 2035. Along the way, emissions would fall by 55 percent from 2021 levels by 2030. The package of proposals was released this summer.

The suppliers' group is calling for a mixed-technology approach to emissions reductions, including hybrid technologies, so-called green hydrogen and renewable fuels. That approach would still cut emissions by 50 percent and maintain current employment levels, CLEPA said.

"The study highlights the risks of an EV-only approach for the livelihood of hundreds of thousands of people working hard to deliver the technological solutions for sustainable mobility," CLEPA Secretary General Sigrid de Vries said in a news release Monday. 

According to the report, prepared by PwC for CLEPA, 1.7 million people work at automotive suppliers in Europe, with an additional 1.2 million jobs at automakers. There are also about 1.21 million jobs in activities such as tires, body manufacturing, chemicals, batteries and electrical equipment, and 3.2 million in support services.

The study considered three questions:

1. What is the impact of different powertrain technologies on the value that suppliers can add?
2. What is the corresponding effect on jobs?
3. What is the effect on climate targets?

The majority, 70 percent, of the electric vehicle "value add" would come from batteries, from raw materials to cells to pack assembly to recycling. However, that industry is just ramping up in Europe, with many gigafactories planned but few currently in operation.

As that industry develops, jobs at internal-combustion suppliers will drop off sharply, especially after 2030, the study found. There are 599,000 positions in the sector today, but that figure will fall to 513,000 in 2030 -- and just 153,000 in 2035.

The study envisions three powertrain scenarios:

1. Mixed technology, which would still cut CO2 emissions from the current 95 gram per km to 20 g/km in 2040, and would add about 200,000 jobs by that year
2. EV-only, which would cut emissions to zero by 2040, but with a corresponding loss of 275,000 positions
3. A "radical" situation, in which emissions are cut to zero by 2030, but job losses would top 360,000.

"Society's needs are far too diverse for a one-fits-all approach," de Vries said in the release. "A regulatory framework that is open to all available solutions, like the use of hybrid technologies, green hydrogen and renewable sustainable fuels will enable innovation as we redefine mobility in the coming decades."

The biggest job losses would be in Germany (121,000), Italy (74,000), Spain (72,000) and Romania (56,000).

A more optimistic assessment was published in July by Boston Consulting Group, which considered overall industry employment levels and in a more limited time frame than CLEPA, 2030 vs. 2040.

"Contrary to what some observers expect, we found that EVs will have only a minor net impact on jobs through 2030," the report said.

Like the CLEPA report, BCG found that the battery supply chain will be the biggest driver of new jobs.

Overall, according to BCG, starting from a baseline of 5.65 million jobs in 2019, automotive sector employment will be flat through 2030, with a decrease in jobs of 1 percent, a figure that could fluctuate up or down depending on volume rather than structural issues.

In addition to batteries, factors that will drive job creation at automakers and suppliers include the addition of new technologies and software, and an increase in premium and luxury sales, the report found.

"While the core automotive industry will certainly suffer significant job losses, some new industries that support electrification will experience tremendous job growth over the next ten years," BCG said. 

Internal-combustion workers will be the hardest hit, the report acknowledges, with a loss of 630,000 jobs in the shift to EVs -- but demand for batteries, charging infrastructure and other services will create 580,000 positions.

The BCG report says a total of 2.4 million workers will need retraining, with 1.6 million remaining at their current jobs and companies, with "slightly different requirements;" 610,000 remaining in the industry but relocating, for example, going from transmission to electric motor production; and 225,000 needed full "requalification and relocation," such as moving from auto assembly to battery cell factories.

Unlike CLEPA, BCG endorses a fast transition to electric vehicles. "Maintaining or even accelerating the transition to EVs as the core automotive technology for the near term is essential to give a 'green boost' to employment," the report said.

"However, such a strategy must be accompanied by skill building and retraining on a tremendous scale," BCG said. "Governments, companies, and individuals all have a role to play in meeting the challenges."