Electric Vehicle Transition Impact Assessment

What’s at stake?

Reaching climate neutrality in the EU by 2050 requires ambitious emissions reduction. This means an unprecedented transformation for the automotive industry and its supply chain, and one that will have a major impact not only on employment, but also on consumer choice, the affordability of individual mobility, and EU competitiveness.

CLEPA fully supports the objectives of the Green Deal. In fact, automotive suppliers design and manufacture all of the components and systems that are needed to achieve the ambitious goals for road transport. Our members invest heavily in new technologies and create the new product portfolios needed to achieve smart, safe, and sustainable mobility.

However, the face of the industry will change as a result of the transition to electric powertrains, including the restructuring of production sites and the workforce.
The automotive manufacturing sector is directly responsible for more than 8.6% of EU employment in manufacturing. In 13 EU Member States the sector represents more than 5% of the overall manufacturing employment, highlighting the industry’s critical role across Europe. More than 60% of these workers are employed by automotive suppliers (1.7 million).

Automotive suppliers alone currently employ about 600,000 people, whose work depends on the internal combustion engine. The livelihoods that depend on those jobs need to be taken into consideration. The production of battery electric vehicles will create new employment opportunities, but overall is less labour intensive. It is therefore critical that we assess what different policy approaches would mean for employment and the realisation of climate targets
In a first of its kind study,  PwC Strategy&, assesses the impact of three different market scenarios: a mixed technology approach, the current EV-only approach proposed in the Fit for 55 package, and a radical EV ramp-up approach, on employment and value-add across the EU and individual members states along the automotive supply chain to 2040.

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. As automotive suppliers are responsible for most of the manufacturing employment in the automotive industry, it is critical that we put these jobs front and center when managing the social and economic impact of the transformation. Innovations by automotive suppliers have made electric mobility increasingly accessible for consumers and an essential instrument to meet emission reduction targets. But society’s needs are far too diverse for a one-fits-all approach. 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.

Sigrid de Vries
CLEPA Secretary General

Key takeaways

An EV-only approach puts jobs significantly at risk. 501k jobs, or 84% of current ICE powertrain employment, will become obsolete. New opportunities in the EV powertrain (226k) mean a net loss of 275k, but losses are not compensated 1:1.
Majority of future value-add in the EV powertrain domain (approximately 70 billion euros) depends on an established full EU battery chain. Subsequently, value-add projections for EVs are entirely dependent on uncertain local battery production.
A steep reduction of ICE powertrain jobs is expected in just a five-year period, from 2030-2035. The more abrupt the loss of ICE powertrain employment, the greater the pressure on regional economies and to up and re-skill workers.
The auto supplier includes hundreds of specialised companies and SMEs: highly innovative but with fewer funds to invest in the transformation of their business models, bearing the brunt of the transition impact.
Mixed technology
A mixed technology approach, provides employment growth and stability, without compromising on climate. By complementing electrification, allowing use of renewable fuels would deliver a  minimum 50% CO2 reduction by 2030.

Call to action

Social disruption due to a badly managed transition could severely undermine the ability of the European Green Deal to succeed and could cause long-term damage to our economies and societies​. A mixed technology approach, including rapid electrification, would help mitigate risk and create a more manageable transition. It is imperative that the transition happen in a thoughtful and deliberate way that preserves industry competitiveness and jobs, while not compromising on climate targets

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 and choice as we redefine the future of mobility. As not all electric vehicles run on renewable energy, the term “zero emissions” is misleading.

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 approach as a first step, which considers the production and distribution of the fuel/electricity used to power a vehicle. The introduction of a voluntary fuel crediting mechanism, which enables an additional option for automakers to fulfill the fleet-wide CO2 targets with volumes of sustainable renewable fuels, should be recognised in the upcoming revision of the CO2 standards for cars and vans.

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Policy Event

CLEPA hosted an online public debate with key stakeholders to discuss how policymakers and industry can best cooperate to mitigate the social and economic impacts of this important transformation: