Clepa, the European Association of Automotive suppliers, has PwC Strategy& commissioned to evaluate the impact of three different Green Deal Policy Scenarios on employment and value creation in automotive suppliers throughout Europe in the period 2020 to 2040. The scenarios form a mixed technology approach, the current pure e-auto approach proposed in the Fit-for-55 packet, and a radical e-auto-intensification scenario. All three scenarios expire from accelerated electrification to achieve the climate goals, with a high market share for electric vehicles by 2030 each more than 50 percent, almost 80 percent or. Almost 100 percent.
The automotive industry ensures more than 5 percent of total employment in the manufacturing sector in 13 EU Member States, with more than 60 percent of these employees being employed by automotive suppliers.
The study therefore provides a much-needed pan-European assessment and also identifies the risks and opportunities in seven major automotive component producing countries (Germany, Spain, France, Italy, Czech Republic, Poland and Romania), according to the German Automobile Association VDA. The study is also the first of its kind to assess the impact of different policy pathways to achieve Green Deal targets, with a focus on automotive suppliers.
While automakers have better opportunities to outsource or ingest activities to compensate for a loss of powertrain activity, automotive suppliers are much less agile as they are tied to long-term contracts with vehicle manufacturers. In addition to global and well-capitalized industry leaders, the sector of hundreds of specialized companies and SMEs, which have less access to capital to invest in the transformation of their business models.
Technology change or upheaval?
The study predicts that in the all-electric car scenario, 70 percent of the impact on employment will be felt as early as 2030-2035. She reiterates that the chances for EVs depend on the establishment of a deep EU battery supply chain, the timing and likelihood of which is still uncertain. Western European countries appear to be best placed to become EV powertrain manufacturing strongholds, while employment in the mid- to. Eastern European countries will continue to be heavily dependent on the internal combustion engine.
“In recent years, the automotive industry has agreed on a common direction to bring CO2-neutral vehicles onto the roads. While the electrification at the same time endangers workstations in the powertrain, other qualifications in areas such as software or infrastructure will be needed in the future, on the other hand,. Future value creation and job creation in drive technologies depend heavily on battery production in Europe.“ – Felix Kuhnert, Partner and Global Automotive Leader at PwC Germany
The study shows that up to 70 billion euros (70 percent) of the added value of the electric drive will be associated with the processing of battery materials, the manufacture of battery cells and cell modules and the assembly of battery systems. It must be highlighted that these activities will not necessarily take place in the same companies or in the same regions, as they require significant other skills and knowledge compared to conventional drive technology and therefore no chances of providing most drive-oriented automotive suppliers, especially small and medium-sized companies, which stands for around 20 percent of employees in the automotive supplier. Previous studies of CLEPA have shown that the battery production provides relatively viewed more workplaces for academically trained forces and less for the forces in mechanics currently producing parts associated with internal combustion engines.
“The study highlights the risks of a pure electric vehicle approach for the livelihood of people who work hard to provide technological solutions for sustainable mobility,” says Sigrid de Vries to consider the CLEPA Secretary-General. Since the automotive industry ensures the automotive suppliers for most of the jobs, it is crucial to focus on the focus of the social and economic impact of the transformation. “Innovations of automotive suppliers have increasingly made electromobility for consumers and made an indispensable instrument for achieving emission reduction targets,” says De Vries. But the needs of society are too diverse to meet them with a uniform approach. A regulatory framework open to all available solutions, including the use of hybrid technologies, green hydrogen and renewable sustainable fuels, will “enable innovation as we redefine mobility in the coming decades.”
Hildegard Muller, VDA President, also defends a technology-open approach. “The automotive industry will deliver climate-neutral mobility by 2050 at the latest,” she promises. German companies will invest around 150 billion euros in future technologies over the next few years. “Nevertheless, openness to technology and innovation must be the basis of any supporting political framework in the coming decades,” said Muller. The study underlines that Germany is well prepared to attract investments in electromobility that are critical to future employment opportunities in the industry.
“The transformation does not constitute a big challenge for the currently 130.000 employees in the powertrain of the automotive suppliers, “says the VDA President. “Europe and Germany have to support companies in the transformation process and especially for qualification measures so as many workers as possible retain their workplace in the industry.”Only a socially designed transformation can be successful in the long term and ensure that Germany remains the car country in Europe. This is the result of hard work and high risks, which are discussed in particular by SMEs, says Muller. “They remain the backbone of the German supplier landscape and the entire industry. Therefore, they need the full support of the new federal government in their multi-dimensional transformation process.”
It must be ensured that the European Green Deal prohibits no technologies and not only supports the introduction of e-mobility, but also creates incentives for investment in hydrogen and e-fuel, requires Muller.
CLEPA policy recommendations
The current Fit-for-55 proposal for CO2 emission standards for cars and vans only considers emissions from the tailpipe of the vehicle and not emissions related to the manufacture of vehicles or their fuels, including electricity generation. In order to incentivize technologies with the lowest carbon footprint, emissions from vehicles should ideally be regulated on a life cycle basis, recommends CLEPA.
The well-to-wheel (WtW) approach is a first step that takes into account the production and distribution of the fuel/electricity used to drive the vehicle. Emission reductions on the generation side of the fuel / electricity should be taken into account when determining compliance with CO2 standards, for example by the introduction of a voluntary billing mechanism, which opens an additional possibility of the automobile manufacturers, to meet the fleet-wide goals with additional quantities of renewable fuels.
Technology-offness lend industry to the necessary time for the transition and simultaneously mitigate the social outbreaks that often associate with abrupt changes without compromising at the climate. A planned and thoughtful transition in the form of an approach with mixed technologies offers options open to adapt to new developments – Be it technological breakthroughs, geopolitical events or availability of resources. At the same time, it offers significant value creation opportunities in the automotive industry as one of the largest industrial sectors in Europe.
Sigrid de vries continues: “A technology open approach should include rapid electrification with clean and renewable energy, complemented by clean combustion technology with sustainable renewable fuels. There are more options than zero emission exhaust systems, and we need to recognize the role that climate-neutral fuels in the reduction of emissions, the preservation of the choices of consumers, the affordability and the preservation of the global competitiveness of Europe. The enemy here is not technology, but rather fossil fuels. Technology openness will be crucial to enable a just transition.”
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