Auto Industry Eliminating Jobs to Support Electric Vehicle Tech: Report

Matt Posky
by Matt Posky

With environmentalism sweeping through the automotive industry of late, manufacturers are spending oodles of cash to fund the continued development of electric vehicles. Unfortunately, the are doing this during a period where the developed world’s taste for cars has already reached its zenith — or so it seems. Growth is slowing in markets across the globe and cuts have to be made somewhere if the industry players want to keep their bottom line positioned firmly in the black.

A recent report from Bloomberg, estimated that around 80,000 auto jobs will be eliminated in the coming years as a result of electrification — with the majority concentrated in the United States, Germany, and United Kingdom. Though the onslaught of cuts will not be limited to the developed world, nor entirely the fault of EVs.

Last week, Daimler announced it would have to sacrifice at least 10,000 jobs (10 percent of which will be related to management) so it could save roughly $1.5 billion over the next three years. “The automotive industry is in the middle of the biggest transformation in its history,” the company stated in its announcement. “The development towards CO2-neutral mobility requires large investments, which is why Daimler announced in the middle of November that it would launch a programme [sic] to increase competitiveness, innovation and investment strength.”

A day earlier, Audi did the same — saying it would need to cut 9,500 jobs by 2025 (about 10 percent of its global workforce). On the upside, it wagered it could create 2,000 via new technologies. But that still works out to a net loss of 7,500 employees.

Domestic manufacturers, that have begun pivoting to electric vehicles while investing billions into expansive mobility projects, are also suffering. Both Ford and General Motors have said they would be eliminating thousands of jobs. GM’s restructuring plan, announced in November of 2018, will ultimately shrink its North American work force by 15 percent. Meanwhile, Ford is looking at dumping 10 percent of its global staff to help it brace for the future — with at least 12,000 positions being lost in Europe alone.

Line workers are already fearful of automation, but the prospect of manufacturers adding more electric vehicles to their lineup is adding to those concerns. EVs typically need fewer parts than internal-combustion models, often requiring less hands to cobble together. The issue was even touched upon in the Trump administration’s plan to scale back existing emission requirements, suggesting that pushing electrification would risk American jobs. While that seems to be a valid concern, it’s not the only reason for the sweeping cuts. Many markets simply appear to have plateaued — and not just in the West.

From Bloomberg:

Cuts are also being carried out in China, which employs the largest number of people in the industry and has been mired in a sales slump. Electric-vehicle startup NIO Inc., which has lost billions of dollars and watched its New York-listed shares plummet, dismissed about 20 [percent] of its workforce by the end of September, shedding more than 2,000 jobs.

“The persistent slowdown in global markets will continue to dent automakers’ margins and earnings, which have already been hurt by increased R&D spending for autonomous-driving technology,” said Gillian Davis, an analyst with Bloomberg Intelligence. “Many automakers are now focused on cost-saving plans to prevent margin erosion.”

Being an early leader in electrification hasn’t spared Nissan, which has been in turmoil since the arrest of former Chairman Carlos Ghosn a year ago.

With profits plumbing decade lows, the Japanese automaker is shedding 12,500 positions in the coming years, mostly at factories across the globe, to reduce costs as it rushes to refresh an aging model lineup. A redesigned version of the battery-powered Leaf, which debuted later than planned because of the loss of the company’s longtime leader, isn’t giving the company much of a boost this year.

China’s issues are a bit more complicated, however. The PRC funded countless EV startups in a blanket approach to gain a strong lead on the burgeoning EV industry. Nobody expected all of them to stand the test of time. But the country has also implemented rolling emission laws that has frightened away consumers unsure as to the legality of older vehicles. China’s trade war with the United States has further complicated things while raising manufacturing and shipping costs around the globe.

Regardless of how multifaceted the reasons for the widespread staff reductions may be, workers are deeply unhappy and have been voicing their distaste. This year’s labor negotiations with General Motors resulted in a 40 day strike (the longest in decades). On November 22nd, around 15,000 people marched in Germany to protest job cuts in Stuttgart. Germany’s ludicrously powerful labor union, IG Metall, has even suggested that positions are being eliminated so automakers can boost profits and are just using the pricy transition to EVs as an excuse.

That will be difficult to prove, even if the accusations are true. But union leadership has claimed all people need to do for evidence is look to the reasons automakers are giving for staff reductions. For an example of what they’re referencing, let’s go back to the start of this year when General Motors explained the modus operandi for its vast restructuring efforts.

“These actions are necessary to secure the future of the company, including preserving thousands of jobs in the U.S. and globally,” GM spokesman Pat Morrissey said. “We are taking action now while the overall economy and job market are strong, increasing the ability of impacted employees to continue to advance in their careers, should they choose to do so.”

Other automakers have issued similar statements, often suggesting it’s better to slash jobs now than wait until the industry is in a worse spot or laid-off employees find themselves in the midst of a brutal recession. But it doesn’t change the fact the industry is hemorrhaging jobs and people are demanding answers, if not a satisfactory solution to the growing employment problem.

[Image: General Motors]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

More by Matt Posky

Comments
Join the conversation
2 of 41 comments
  • 28-Cars-Later 28-Cars-Later on Dec 05, 2019

    This is simply an excuse, the industry isn't doing so well and they all want to cut costs heading into a recession.

  • AVT AVT on Dec 06, 2019

    At no point will the world be completely electric vehicles baring mass exodus from cars to public transit. There are not enough far raw materials to build batteries for every car sold. It's as simple as that. Even today, the total percentage of electric vehicles worldwide sits at less than 1 percent. And that already strained most companies in terms of keeping up with demand for the materials required to build batteries. Realistically, electric cars will be the new luxury vehicles of the future. But everyone having one, no way. And that's just America. Go over to India where a majority of the population essentially lives at or near poverty, you won't see them lining up to buy electric cars anytime soon. And bear in mind they have an additional billion people of population than we do.

  • CanadaCraig You can just imagine how quickly the tires are going to wear out on a 5,800 lbs AWD 2024 Dodge Charger.
  • Luke42 I tried FSD for a month in December 2022 on my Model Y and wasn’t impressed.The building-blocks were amazing but sum of the all of those amazing parts was about as useful as Honda Sensing in terms of reducing the driver’s workload.I have a list of fixes I need to see in Autopilot before I blow another $200 renting FSD. But I will try it for free for a month.I would love it if FSD v12 lived up to the hype and my mind were changed. But I have no reason to believe I might be wrong at this point, based on the reviews I’ve read so far. [shrug]. I’m sure I’ll have more to say about it once I get to test it.
  • FormerFF We bought three new and one used car last year, so we won't be visiting any showrooms this year unless a meteor hits one of them. Sorry to hear that Mini has terminated the manual transmission, a Mini could be a fun car to drive with a stick.It appears that 2025 is going to see a significant decrease in the number of models that can be had with a stick. The used car we bought is a Mk 7 GTI with a six speed manual, and my younger daughter and I are enjoying it quite a lot. We'll be hanging on to it for many years.
  • Oberkanone Where is the value here? Magna is assembling the vehicles. The IP is not novel. Just buy the IP at bankruptcy stage for next to nothing.
  • Jalop1991 what, no Turbo trim?
Next