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Volkswagen: Job Cuts Coming With Shift To EVs, But No Forced Dismissals

One of the background factors related to German auto manufacturer inaction with regard to electric vehicles, a factor that isn’t often publicly acknowledged, is that if the companies in question did make a rapid transition to electric vehicles, then there would be huge layoffs as many jobs and core skills became unnecessary.

One of the background factors related to German auto manufacturer inaction with regard to electric vehicles, a factor that isn’t often publicly acknowledged, is that if the companies in question did make a rapid transition to electric vehicles, then there would be huge layoffs as many jobs and core skills became unnecessary.

volkswagen-i-d-electricConsidering the great political clout that the auto industry in Germany possesses, and the fact that the industry employs a significant portion of the country’s population, this factor is probably an important one.

Volkswagen’s Human Resources Chief (and a member of the company’s top management board), Karlheinz Blessing, recently made an interesting comment on that subject. He noted that he expected a shift to electric vehicles to result in up to 25,000 job cuts over the next decade. (To be extra clear, this figure relates only to Volkswagen.)

Notably, Blessing did also claim in the interview with the Frankfurter Allgemeine Zeitung newspaper that there would be no “forced dismissals,” but rather that positions would only be cut as older employees retire.

That last bit reveals something important about the earlier points. It’s probably unthinkable politically at this point to publicly state that Germany’s auto industry may well be forced to downsize over the coming years.

The simple fact, though, is that electric vehicles are much simpler than internal combustion engine (ICE) vehicles. Most of the proprietary elements of next-gen electric vehicles will be software based, with battery technologies and drivetrain technologies making up the remainder.

Where does all of the technical know-how accumulated by German auto manufacturers over the last 100 years fit into this? Probably not at all. That’s the issue.

I suppose that you could argue that the German firms haven’t been on the top of their game for quite some time (reliability problems, drops in market share, etc.) and that they have largely been trading on name value, status association, and brand loyalty. That being the case, how long can they maintain their current position? Judging by the rate at which Tesla has swallowed market share since the launch of the Model S, I’m guessing they can probably only do so until an obviously superior competitor appears on the market, which will probably be occurring in the 2017–2018 timeframe as the Tesla Model 3 hits the market.

To be clear about that last point, it may well be the case that German auto manufacturer sales remain solid in Germany itself, but if sales in the rest of Europe, the US, and China dip significantly, then the companies in question are going to be in a very bad situation. Models like the BMW 3-Series are cash cows, with high profit margins. The companies can’t stand to lose significant market share to the Tesla Model 3 in markets as big as the US — not without facing existential crises anyways.

Reuters provides more:

“Karlheinz Blessing, who sits on VW group’s nine-member top management board, said the carmaker will need to cut jobs in production as assembly of electric engines requires fewer workers than making combustion engines, the newspaper said, citing an interview to be published in Saturday’s edition.

“Management and labor leaders are seeking to reach agreement on cost cuts and strategy in time for a November 18 meeting of the supervisory board to approve future spending plans.

“Volkswagen’s works council has warned that the talks with management could fail if the carmaker does not agree to invest in its own battery production.”

Blessing stated: “If 30% of the value creation will be in the battery system in future, it is right to consider whether we will step in and to what extent. We cannot leave that to others. How deeply we will engage is a matter we will discuss as part of the future pact.”

As some commentators here on CleanTechnica have noted, a good way to tell how serious an auto manufacturer is about electric vehicles is to see whether it is investing seriously in battery production and research. If Volkswagen is serious about keeping up with the coming changes, then serious investment into batteries will be a necessity — whether through self-production or through the deepening of ties with a supplier. (As a note, Daimler is seemingly pursuing battery production in a real way.)

Without its own battery production and technology, what exactly would Volkswagen be selling in its EVs? A name? A body style?

An obvious danger with that approach is that someone can come along (Deutsche Post is a perfect example of this) and deal directly with the suppliers rather than with you.

 

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Written By

James Ayre's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy.

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