EV Transition Impact Assessment: 5 key questions answered
CLEPA and its members fully support the energy transition and the EU’s climate objectives. As key innovators, designing and manufacturing all of the systems and components needed for safe, smart and sustainable mobility, CLEPA members are in the frontlines of the mobility transformation.
It is therefore incumbent upon us to understand the practical implications on the 600,000+ jobs currently in the ICE powertrain domain. This essential transition is not just about emissions, it’s also about real people and businesses. It would be irresponsible not to ascertain the impact of different market scenarios in order to understand the social and environmental outcomes of choices taken today. CLEPA aims to provide fact-based evidence and precise forecasts in order to better inform policy making and avoid unintended consequences.
We fully support rapid electrification as a must to reaching climate objectives, in combination with other sustainable low and net-carbon options. Decarbonising the transport sector is absolutely essential, and this can only be achieved through a mixed technology approach, allowing Europe to transition in an effective and efficient manner, while preserving jobs, EU competitiveness, and consumer choice and affordability. A manageable and just transition is necessary for a successful Green Deal.
Given recent interpretations, we welcome the opportunity to complement the study commissioned by CLEPA, and carried out by PwC Strategy&, entitled ‘EV Transition Impact Assessment 2020-2040: Study on Workforce of Automotive Suppliers’, with additional educational elements and details about the methodology and conclusions, issued by CLEPA. Please see more on our position on climate-neutral transport and CO2 standards here and more Q&As on the study answered here.
1. What are the similarities and differences between this and other studies looking at the potential impact of electrification?
Earlier studies into the employment impact of electrification have primarily focused on vehicle manufacturers rather than automotive suppliers. As suppliers represent more than 60% of employment in the automotive sector, with one-fifth consisting of SMEs and highly specialised companies, our study is the first of its kind in that it takes a more granular look at the company, regional and supplier-specific challenges in the powertrain domain, whereas other studies look more widely at the mobility ecosystem as a whole.
This focus on the powertrain domain was by design, as this segment currently represents 30-40% of value-add for suppliers, therefore providing a much-needed assessment of the impacts on the supplier industry, specifically. PwC Strategy& combined a macro-model with country, technology and supplier specific insight based on 199 collected surveys (mostly at plant level) and 33 expert interviews and workshops. Please find more on the methodology of the study here. As in earlier reports conducted by the Boston Consulting Group (June 2021), Fraunhofer (December 2018) and other leading institutes, CLEPA’s study concludes that an electric only approach will have a significant social impact independently of the opportunities that may be created, as jobs lost are not necessarily compensated by those gained on a 1:1 basis.
Both the CLEPA and BCG studies forecast a net-loss of jobs as a result of the EV transition. The BCG study offers valuable estimates of impact until 2030, however, according to our study, the biggest social impact – 70% of job losses – are foreseen after 2030, specifically in the period of 2030 – 2035. Nonetheless, the BCG finds that until 2030 alone, 166,000 and 274,000 job losses related to electrification with automotive manufacturers and suppliers, respectively, will occur, with job creation in the battery and EV component sector limited to 237,000.
2. Is a mixed technology approach just a way to maintain the status quo and the internal combustion engine?
No. By 2030, 91% of light vehicle sales will be electrified powertrains and more than half of vehicles sold can be powered by electricity alone2. Sales of hybrid vehicles peak in 2035 while battery electric and fuel cell vehicles will continue their growth.
Our mutual objective with the EU is to reduce emissions and reach climate-neutral mobility. Technology is not the enemy, but rather fossil fuels. What is meant by mixed technology is rapid electrification, in combination with other sustainable low and net-carbon options, which would make the transformation more manageable without compromising on climate goals.
3. Is the term “zero-emission” accurate – how should the carbon footprint of a vehicle be measured?
The issue with the current tailpipe measurement (or Tank-to-Wheel) is that it only assesses emissions from the vehicle’s exhaust, ignoring emissions related to the production of vehicles or the fuels they use, including how electricity is generated. A more accurate term would therefore be zero tailpipe emissions. To incentivise technologies with the lowest overall carbon footprint, emissions from vehicles should ideally be regulated on life-cycle basis, with a Well-to-Wheel (WtW) approach as a first step, which considers the production and distribution of the fuel/electricity used to power a vehicle (Well-to-Tank). More explanation on the different phases of CO2 emissions measurements can be found here.
4. Are EVs the only way to meet Green Deal objectives, and to reduce transport related emissions?
There are more options than tailpipe-zero emissions. A technology open approach, including rapid electrification with renewable energy, complemented by advanced combustion technology with sustainable renewable fuels, allows us to reduce emissions both through renewable energy and net-carbon fuels. In fact, without sustainable renewable fuels, the EU will not be able to decarbonise the existing fleet of over 300 million vehicles, which is essential to reaching climate targets.
All available solutions that can help reduce transport related emissions should play a role in the path towards climate neutrality. The approach to decarbonisation should not risk EU competitiveness, massive job losses in a short time frame, or negate the affordability and choice that consumers enjoy today. A technology neutral approach based on a Well-to-Wheel analyses allows the regulatory framework the flexibility to adjust to new developments, be they technological breakthroughs, geopolitical events, or availability of resources.
5. Are the job losses in the ICE powertrain really going to be compensated by those in battery manufacture and electric motors?
The answer is no. Our study points at a net loss of 275,000 jobs in the powertrain domain until 2040 and reflects that while 80% of the job losses take place between 2030 and 2040, only 40% of all jobs created in the EV powertrain occur in the same time period.
Automation will play a considerable role in the future and, as illustrated by our Automotive Footprint Employment Portal, the employment growth in the EV domain after 2030 will significantly decrease. It should also be noted that 70% of the EV job creation is likely to be in the battery domain, which typically requires more academically schooled workers and less vocationally trained workers than the production of transmission systems, fuel tanks or other powertrain components.
As pointed out by the data in the Portal’s overview, there are job opportunities outside of manufacturing (or type of powertrain) linked to the EV transformation, such as with connected and autonomous driving and other areas of digitalisation, but these may be temporary in nature, require a different skill set or located in a different region, further illustrating that job losses are not necessarily compensated by jobs gained. Therefore, to understand the employment impact and what is needed for a manageable transition, it is prudent to assess the jobs within the powertrain manufacturing domain.
Lastly, as the bulk of the EV job creation hinges on a full EU batter chain, it is important to underscore that uncertainties still exist. Although gigafactories are planned, with finance secured, 45% of the full battery value creation is in raw materials and battery chemical processing, where investment, supply, and sourcing continues to be an issue. Investment commitments alone will not suffice if a plant does not have the necessary supply. It is socially and economically responsible to mitigate the job loss while we develop the full value chain by creating a flexible regulatory framework allowing for rapid electrification, complemented by sustainable renewable fuels.
Further questions on methodology or data?
Don’t hesitate to contact CLEPA’s Head of Strategic Communications Filipa Rio: firstname.lastname@example.org
CLEPA, the European Association of Automotive Suppliers based in Brussels, represents over 3,000 companies, from multi-nationals to SMEs, supplying state-of-the-art components and innovative technology for safe, smart and sustainable mobility, investing over €30 billion yearly in research and development. Automotive suppliers in Europe directly employ 1.7 million people in the EU.
1. Includes all components that are directly affected by the electrification of light vehicles and all affected jobs and job opportunities linked to the production of these components, notably power storage (fuel tank vs. battery), energy distribution (fuel pump and line vs. power electronics and management), power transformation (engine vs. electric motor), transmission and thermal management.
2. Includes battery electric vehicles, fuel cell electric vehicles, plug-in hybrid electric vehicles and full hybrid electric vehicles and excludes mild hybrids. Mild hybrids are included in the category of electrified powertrains.
In: CLEPA News