Dual Realities: VW CEO Claims Slow EV Shift Could Cost 30,000 Jobs

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Volkswagen

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Like the rest of the world, the automotive industry is currently living in two distinct realities. Labor unions and part suppliers have been sounding the alarm that electric vehicles will require far fewer hands to manufacture and will ultimately lead to their demise. But battery firms, establishment politicians, and most automakers have claimed that transitioning to EVs is entirely necessary and will result in there being a surge of high-paying jobs to replace those lost.

Then there are claims you can’t quite wrap your head around, like the one Volkswagen CEO Herbert Diess reportedly made to the supervisory board in September. The Diess Man asserted that VW would lose 30,000 jobs if it transitioned too slowly to electrics, framing the situation around Tesla arriving in Germany and fresh competition from Chinese manufacturers. While it’s certainly possible that VW could take a hit as its rivals move on Europe, the premise that it’s going to cost the business jobs is sort of bewildering when just about every analyst agrees that electrification will result in a leaner workforce across the board. 

Morgan Stanley’s Adam Jonas even cited Diess in a research note from 2019 predicting an industrial shift that would eliminate an estimated 3 million automotive jobs by 2025. Volkswagen’s CEO had famously said that it would require 30 percent less labor to piece together an EV than a similarly priced internal combustion vehicle. Jonas based his estimation on the figure after working out how many people were currently employed by automakers and part suppliers.

“As auto companies shift production towards electric vehicles, we expect increased pressure on a 100-year-old auto ecosystem supporting millions of jobs globally … representing a risk to labor relations, earnings and the balance sheet,” he said.

But the final tally could be greater than 3 million. Jonas noted that Tesla and Rivian were likely to manufacturer electric vehicles at a 50 percent reduction in direct labor. EVs are also presumed to require substantially less maintenance and servicing than traditional automobiles, resulting in fewer mechanics and the supportive infrastructure.

More recently, the Economic Policy Institute (EPI) tried to figure out a way to make the Biden administrations plan to electrify the nation work in a manner that wouldn’t result in fewer jobs. The think tank issued a report last month claiming that there could be 75,000 fewer American auto jobs by 2030 due to EVs. But it also suggested that the loss could be turned into 150,000 new positions if the government spent a bunch of money and influence to make sure parts and vehicles were constructed stateside. But it’s only works if electrics also become the dominant mode of personal transportation and the existing investments were maintained.

The EPI is only being brought up because it’s friendly to the current administration and its goals, yet still predicted significant American job losses without some kind of aggressive government intervention and massive financial investments. Practically nobody tasked with making predictions about the industry sees EVs resulting in a more robust workforce.

So then what the hell was Herbert Diess talking about?

According to Reuters, he was alluding to the uphill battle would have to fight against smaller EV firms coming out of the United States and China. Volkswagen currently has around 25,000 employees building 700,000 cars annually in Wolfsburg. While the site is capable of manufacturing in greater numbers, VW has to bring on more people to handle the task. But Tesla has asserted that its upcoming German facility will turn over 500,000 cars per year with just 12,000 employees.

“There is no question that we have to address the competitiveness of our plant in Wolfsburg in view of new market entrants,” Volkswagen spokesperson Michael Manske told the outlet.

“Tesla is setting new standards for productivity and scale in Grunheide,” he continued. “A debate is now underway and there are already many good ideas. There are no concrete scenarios.”

From Reuters:

A spokesperson for Volkswagen’s workers’ council said that while they would not comment on whether Diess made the remarks, “a reduction of 30,000 jobs is absurd and baseless”.

Another union spokesperson from the region of Lower-Saxony, which is Volkswagen’s second-largest shareholder, said such cuts were “out of the question”.

EVs have far fewer parts than an internal combustion engine car and so require fewer workers to produce. According to one estimate, 100,000 jobs in the German autos industry could be lost by 2025 as a result of electrification.

German labor unions have been suspicious of electrification for a few years now, which brings us back to our starting point. Various entities see this issue in entirely different ways and it’s causing a massive schism between them. For part suppliers, labor groups, and independent mechanics, the mainstreaming of EVs represents the end of an era and the probable demise of their respective professions. At the very least, they seem convinced that they’ll soon be competing on a tighter field with fewer opportunities as jobs disappear. But automotive executives and heads of state are hell bent on pursuing electrification under the auspices that it’s better for the environment and will usher in a technological renaissance befitting of their own utopian visions.

Truth probably exists somewhere in the middle, likely after decades of improving liquid field and battery powered vehicles to see who ultimately comes out on top. However we’re currently living through a transitional period where one side cannot even see the peril of offloading millions of jobs within a relatively short timeframe. Herr Diess is thinking about VW’s bottom line, new business opportunities, and the sustainability of the company overall as the Teslas of the world cotinine gaining ground. But Line workers are just worried about having a job next year.

[Image: Volkswagen Group]

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