Electric cars: automakers start laying off jobs in Europe – 02/26/2023 – Market

Although built in England, a Mini’s petrol engine is a map of Europe: designed in Germany, it contains an alternator from France, an ignition coil from Italy and a coolant pump from Austria. Each step in this process involves one person, if not several.

However, none of that will be needed in just seven years when the brand goes all-electric. The same goes for those who supply engines for Volvo, Mercedes-Benz, Jaguar, Ford or any of the brands that have set dates for the end of car sales in Europe.

The fact that electric vehicles require fewer people to manufacture and design is well documented.

What has been abstracted is the effect on the region’s workforce when the ax kicks in. Ford this month announced plans to cut 40% of its entire engineering staff in Europe.

The switch to electric is moving the brand (and many others) away from smaller models, while the remaining models are battery-powered and therefore quicker to design and simpler to assemble. The cold reality is that Ford’s announcement is just the first cut, comprising a small part of an entire machine that will be phased out in a decade or so.

Today, the automobile industry in Europe employs 3.5 million people directly in manufacturing. Ford chief executive Jim Farley estimates that EVs require 40% fewer people to produce — the equivalent of 1.4 million jobs if applied to the entire industry.

These are highly skilled, high-productivity, well-paying positions, often in geographical areas that would otherwise be economically backward. Just look at the Nissan factory in Sunderland (UK) or in Slovakia, which has four factories that produce one car for every five people living in the country annually.

Yes, there can be job creation, new roles in the new frontiers of batteries or software development – ​​a 2021 study by the Boston Consulting Group estimated the creation of 581,000 jobs in Europe. But to pretend that they will be filled from the recycling of discarded diesel engineers is fanciful.

Some companies offer retraining, others don’t replace retiring employees. But that will only numb, not eliminate, the pain. Perhaps the most painful thing for workers who lose their jobs is that the march to the EV gallows was initiated by politicians and regulators.

Europe’s regulators have decided that new cars from the region need to be zero emission by 2035. This is undoubtedly the right choice for the planet. But this need will create enormous collateral damage. Europe today is a world leader in engines, being home to Ferrari, Mercedes-Benz and Volkswagen (Japan and Detroit also deserve podium spots here).

However, it is China, which anticipated the battery revolution more than a decade ago and positioned itself as a global leader, which is best positioned to dominate the automotive landscape of tomorrow.

Hydrogen, with its low energy density, is an imperfect solution for cars unless it is used as a larger store of renewable energy, but at least it uses many of the same supply chain roles that exist today.

A strategic and coordinated decision 15 years ago by European authorities to develop this technology, if successful, would have protected jobs that are now facing extinction.

Even Mate Rimac, the Croatian inventor of the electric hypercar whose business was partly taken over by Porsche, says the region is “shooting itself in the foot” with its policies.

The coming job cuts are the inevitable victim of deliberate policy choices made by regulators who will not be in office when the region’s jobless queues are swelled by their decisions.

Even if you agree that the policy was necessary, it’s still true that Europe has dropped a bomb under the region’s automotive employment. Now can’t complain when the whole thing blows up.

_{Translated by Luiz Roberto M. Gonçalves}