Switch to Electric Vehicles Disrupting Workforces Worldwide

BRUSSELS – Governments worldwide are thinking hard about cushioning impacts from the shift to electric vehicles on auto companies, their suppliers and workers, avoiding political and industrial relations blowbacks from related job losses, plant closures and, sometimes, labor shortages. 

In Europe, American and locally owned auto companies have been, with labor unions, pressing European Union lawmakers for more funding and specialist programs to ease the switch from internal-combustion-engine to battery-electric vehicles in automaking regions. These calls will intensify as the EU’s 2035 zero-carbon deadline nears, notably to retrain, reskill and upskill workers. 

“The green and digital shift will require a significant transformation of the automotive value chain and production processes, which may entail job losses,” a European Automobile Manufacturers’ Assn. (ACEA) spokesperson tells WardsAuto: “It is evident that new jobs will not become available at the same time, in the same place, requiring the same qualifications. That is why the European auto industry needs support from EU, national and regional authorities to facilitate labor force transformation.”

Losses are certain among the 13 million jobs in Europe’s auto sector, including 1.1 million directly employed by OEMs and 1.7 million by automotive suppliers, according to Benjamin Denis, head of industrial policy coordination at the industriAll Europe labor union.“What is less well known is the intensity, pace and where job losses will take place,” he says.

As OEMs adapt existing plants to BEV production, supply chain jobs likely will be hardest hit, especially those linked to ICE parts not in BEVs, such as fuel injection systems or timing belts, a study commissioned by the European Association of Automotive Suppliers (CLEPA) concludes.

BMW iX5 FCEV assembly screenshot

Commissioned from accounting network PwC, the study forecasts 359,000 ICE powertrain jobs going by the wayside between 2030 and 2035. And it warns a strict EV-only approach would wipe out 501,000 positions in Europe, as 84% of the current 600,000 ICE powertrain jobs become obsolete. Even the 226,000 new opportunities in EV powertrain would bring a net loss of 275,000.

A Dec. 12 resolution by the European Parliament reflects political concerns about such numbers. It demands targeted EU aid with specific programs to help regions affected by the automotive transition, notably with retraining and reskilling. The resolution calls on the European Commission (EC) to extend past 2027 both the €17.5 billion ($19 billion) EU Just Transition Fund (https://ec.europa.eu/regional_policy/funding/just-transition-fund_en) and auto industry-focused regional development policy measures under the European Regional Development Fund (ERDF) and European Social Fund Plus (ESF+ ).

An EC spokesperson points out what these regional development policies (designed to help poorer regions in Europe) were already doing, specifically the ERDF, whose smart specialization strategies from 2021 through 2027 “provide a framework” for regions to direct €35 billion ($38 billion) into the transition. Similarly, the €55 billion ($60 billion) Just Transition Fund helps the EU regions most hit by decarbonization policies, including the shift to EVs.

But Nils Poel, CLEPA’s head of market affairs, stresses to WardsAuto that such supports need to be more sophisticated than just looking for low GDP numbers: “The regions with most reskilling needs are not always the poorer regions. The question is therefore whether cohesion (regional development) funding should be the only instrument to support reskilling, as this focuses on less economically developed regions.”

The EC spokesperson points to “several EU funding opportunities” to secure a skilled workforce in the BEV future, listing ESF+, the EU’s Recovery and Resilience Facility, and the social investments and skills section of InvestEU and REACT-EU, investment programs which provided €10 million ($10.9 million) to set up the European Battery Alliance Academy training platform covering the whole battery value chain aiming to train 800,000 workers by 2025.

Public-private partnerships under the EU’s “Pact for Skills” program, including one linking the nonprofit Automotive Skills Alliance (https://automotive-skills-alliance.eu/) of trade associations such as ACEA and CLEPA, also “will help mobilize the private sector and other stakeholders to upskill and reskill Europe’s workforce,” the EC spokesperson says. The pact aims to upskill 5% of the European auto workforce annually, “translating to the upskilling and reskilling of 700,000 employees in the automotive ecosystem in the coming years.”

VW ID.4 assembly at Emden Germany screenshot_0

Whatever the program, CLEPA bemoans the focus on funding new reskilling initiatives rather than helping scale and expand existing in-house and industrywide measures, especially in costly continuous training. 

Such considerations helped inspire a major new U.S. federal program announced in August 2023, where the Department of Energy spends $15.5 billion via grants and loans on retooling existing auto plants to aid the transition to EV production (https://www.energy.gov/articles/biden-harris-administration-announces-155-billion-support-strong-and-just-transition). This includes making available $2 billion in grants and up to $10 billion in loans to support automotive manufacturing conversion projects on condition they “retain high-quality jobs in communities that currently host these manufacturing facilities.”

U.S. states have been stepping in on a smaller scale to help retrain workers. For example, the state of Michigan announced in June 2023 it was working with the Southeast Michigan Community Alliance Workforce Intelligence Network to create a new battery technician certification program at Henry Ford College in Dearborn (https://www.michigan.gov/leo/news/2023/07/06/battery-job-training-program-at-henry-ford).

Indeed, in some manufacturing hubs, the problem with the EV transition may not be job losses, but a lack of trained skilled workers making and repairing EVs and their parts. That was the concern of a December 2023 report from the Canada-based think-tank the Smart Prosperity Institute, which warned: “The shift to ZEVs is not expected to dramatically change the size of the workforce in Canada’s automotive and automotive parts sector. Instead, it is about sustaining, rather than growing, Canada’s automotive workforce.” It said “collaborative support from government, industry, and educational institutions will be needed to ensure that workers are prepared” to handle the shift to EV production in Canada.

– with Keith Nuthall in Ottawa