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Will electric vehicles cause the loss of one million jobs in Europe?

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Pagella Politica, Italy

16 March 2019, Updated: 16 March 2019

Alberto Bombassei, Italian business leader, billionaire and former deputy for the center-right party Scelta Civica, has made the following claim in an interview: “Today there is great enthusiasm for electric vehicles. Nobody, however, is considering their social impact. In Europe, if we stop producing vehicles powered by diesel or petrol and only produce electric vehicles we will lose one job in three [...]. A million Europeans will no longer have a job”. This is a questionable claim. Here’s why.

The FTI Consulting report

The American consulting firm FTI Consulting has produced a report, published on May 5th 2018, on behalf of Acea, the company which represents the 15 largest car manufacturers based in Europe (BMW, Fiat-Chrysler, Volvo, Volkswagen, Renault, Toyota Europe, etc.), titled “Impact of electrically chargeable vehicles on jobs and growth in the EU”.

In the report, we find confirmation of Bombassei’s claim, with even more worrying figures. The premise is that electric vehicles (BEVs) – not to be confused with hybrid vehicles (PHEVs) – require less labour than internal combustion vehicles (ICEs), such as vehicles powered by diesel or petrol.

This assumption is also present in the European Commision's impact assessment which accompanies the proposals regarding CO2 objectives for the automobile sector in the EU for the 2020/2021 period, produced by the consulting firm Ricardo Energy & Environment.

But, as the FTI Consulting report emphasises, the European Commission does not calculate how much less labour would be required in the case of a switch from ICEs to BEVs. According to the studies cited by the report - particularly those produced by the IFO Institute, a major German economic think tank, and UBS - some 60% of jobs in the automotive industry would be negatively affected.

Of about 3 million workers employed in the sector, 1.8 million are apparently at risk - almost two in three.

Many workers are currently employed in the production of components which would no longer be necessary for electric vehicles. These workers would therefore be at risk of losing their jobs. They would also find it difficult to enjoy the new employment opportunities provided by new electric technology, because they generally lack the right qualifications. To mitigate the damage, a significant investment in retraining would then be necessary.

The European Commission’s calculations

Other reports come to different conclusions. The European Commission, in the impact assessment cited by FTI Consulting and produced in February 2018, makes long-term predictions (2020-2040) which take into account both the loss of jobs in the traditional automotive industry and the creation of new jobs due to electric technology.

According to the European institution, the macroeconomic impact of this transformation is minimal. Regarding employment specifically, in the median scenario – where the aim is to reduce harmful emissions by 30% by 2030 – there would be a slight increase in employment, between 0.02% and 0.065%. Job losses in the industrial sector would in fact be compensated by the need for new positions in the electric energy sector.

In absolute terms, according to the European Commission’s assessment, the jobs at risk if electric batteries are all produced outside of the EU would be about 34,500.

The Transport&Environment briefing

A third source arrives at no more dramatic conclusions: a briefing in 2017 by Transport&Environment, a group uniting dozens of environmental organisations and financed by the European Commission, as well as environment ministers from many European countries.

According to this briefing, “the evidence suggests jobs will change in the automotive industry but there will be a net increase in employment across the economy of 500-850 thousand. Estimates of how many jobs will be lost in [the] automotive [industry] are highly uncertain but it seems likely in the medium term to 2030 none or few”.

A large part of the uncertainty relating to the automotive industry, according to the briefing, depends on how willing much the manufacturing industry in Europe will invest in new technology.

If in 2030 not even one electric car is produced in Europe, the job losses would come to 32%, according to the base case scenario. If 10% of electric vehicles are produced in Europe, the losses would fall to 28%. If production reaches 90%, and if batteries are also produced in Europe, then there would be practically no impact at all. And if production was such that it could support exports (120%), jobs would actually rise to 108% relative to the base case scenario.

Conclusion

We’re talking about future, hypothetical scenarios here, where many currently unpredictable variables come into play, so any assessments should be taken with caution. So it’s a long shot to suggest that a million Europeans will be out of work; The margins of uncertainty are such that we can’t exclude any scenario just yet.

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