Dual Realities: VW CEO Claims Slow EV Shift Could Cost 30,000 Jobs

Matt Posky
by Matt Posky

Like the rest of the world, the automotive industry is currently living in two distinct realities. Labor unions and part suppliers have been sounding the alarm that electric vehicles will require far fewer hands to manufacture and will ultimately lead to their demise. But battery firms, establishment politicians, and most automakers have claimed that transitioning to EVs is entirely necessary and will result in there being a surge of high-paying jobs to replace those lost.

Then there are claims you can’t quite wrap your head around, like the one Volkswagen CEO Herbert Diess reportedly made to the supervisory board in September. The Diess Man asserted that VW would lose 30,000 jobs if it transitioned too slowly to electrics, framing the situation around Tesla arriving in Germany and fresh competition from Chinese manufacturers. While it’s certainly possible that VW could take a hit as its rivals move on Europe, the premise that it’s going to cost the business jobs is sort of bewildering when just about every analyst agrees that electrification will result in a leaner workforce across the board.

Morgan Stanley’s Adam Jonas even cited Diess in a research note from 2019 predicting an industrial shift that would eliminate an estimated 3 million automotive jobs by 2025. Volkswagen’s CEO had famously said that it would require 30 percent less labor to piece together an EV than a similarly priced internal combustion vehicle. Jonas based his estimation on the figure after working out how many people were currently employed by automakers and part suppliers.

“As auto companies shift production towards electric vehicles, we expect increased pressure on a 100-year-old auto ecosystem supporting millions of jobs globally … representing a risk to labor relations, earnings and the balance sheet,” he said.

But the final tally could be greater than 3 million. Jonas noted that Tesla and Rivian were likely to manufacturer electric vehicles at a 50 percent reduction in direct labor. EVs are also presumed to require substantially less maintenance and servicing than traditional automobiles, resulting in fewer mechanics and the supportive infrastructure.

More recently, the Economic Policy Institute (EPI) tried to figure out a way to make the Biden administrations plan to electrify the nation work in a manner that wouldn’t result in fewer jobs. The think tank issued a report last month claiming that there could be 75,000 fewer American auto jobs by 2030 due to EVs. But it also suggested that the loss could be turned into 150,000 new positions if the government spent a bunch of money and influence to make sure parts and vehicles were constructed stateside. But it’s only works if electrics also become the dominant mode of personal transportation and the existing investments were maintained.

The EPI is only being brought up because it’s friendly to the current administration and its goals, yet still predicted significant American job losses without some kind of aggressive government intervention and massive financial investments. Practically nobody tasked with making predictions about the industry sees EVs resulting in a more robust workforce.

So then what the hell was Herbert Diess talking about?

According to Reuters, he was alluding to the uphill battle would have to fight against smaller EV firms coming out of the United States and China. Volkswagen currently has around 25,000 employees building 700,000 cars annually in Wolfsburg. While the site is capable of manufacturing in greater numbers, VW has to bring on more people to handle the task. But Tesla has asserted that its upcoming German facility will turn over 500,000 cars per year with just 12,000 employees.

“There is no question that we have to address the competitiveness of our plant in Wolfsburg in view of new market entrants,” Volkswagen spokesperson Michael Manske told the outlet.

“Tesla is setting new standards for productivity and scale in Grunheide,” he continued. “A debate is now underway and there are already many good ideas. There are no concrete scenarios.”

From Reuters:

A spokesperson for Volkswagen’s workers’ council said that while they would not comment on whether Diess made the remarks, “a reduction of 30,000 jobs is absurd and baseless”.

Another union spokesperson from the region of Lower-Saxony, which is Volkswagen’s second-largest shareholder, said such cuts were “out of the question”.

EVs have far fewer parts than an internal combustion engine car and so require fewer workers to produce. According to one estimate, 100,000 jobs in the German autos industry could be lost by 2025 as a result of electrification.

German labor unions have been suspicious of electrification for a few years now, which brings us back to our starting point. Various entities see this issue in entirely different ways and it’s causing a massive schism between them. For part suppliers, labor groups, and independent mechanics, the mainstreaming of EVs represents the end of an era and the probable demise of their respective professions. At the very least, they seem convinced that they’ll soon be competing on a tighter field with fewer opportunities as jobs disappear. But automotive executives and heads of state are hell bent on pursuing electrification under the auspices that it’s better for the environment and will usher in a technological renaissance befitting of their own utopian visions.

Truth probably exists somewhere in the middle, likely after decades of improving liquid field and battery powered vehicles to see who ultimately comes out on top. However we’re currently living through a transitional period where one side cannot even see the peril of offloading millions of jobs within a relatively short timeframe. Herr Diess is thinking about VW’s bottom line, new business opportunities, and the sustainability of the company overall as the Teslas of the world cotinine gaining ground. But Line workers are just worried about having a job next year.

[Image: Volkswagen Group]

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.

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  • Imagefont Imagefont on Oct 14, 2021

    Remember when Musk wanted to build the machine that builds the machine? Because he’s obviously a fan of 70’s science fiction? How did that go? Something something, tents??? How many labor hours go into a Tesla vs a Camry? Last I heard it was a whole lot more.

    • Steve Biro Steve Biro on Oct 14, 2021

      "How many labor hours go into a Tesla vs a Camry? Last I heard it was a whole lot more." That's primarily because Tesla has had - and continues - to learn how to build cars. The companies that have been doing it for a century or more have a leg up in this area - at least for now. I'm sure a pure EV made by Toyota will require far fewer labor hours to build compared with an IC Camry.

  • DungBeetle62 DungBeetle62 on Oct 14, 2021

    What? WHAT??? I thought that awesome logo redesign was going to fix it all, dammit!!!

  • Wjtinfwb Funny. When EV's were bursting onto the scene; Tesla's, Volt's, Leaf's pure EV was all the rage and Hybrids were derided because they still used a gas engine to make them, ahem; usable. Even Volt's were later derided when it was revealed that the Volt's gas engine was actually connected to the wheels, not just a generator. Now, Hybrids are warmly welcomed into the Electric fraternity by virtue of being "electrified". If a change in definition is what it takes, I'm all for it. Hybrid's make so much sense in most American's usage patterns and if needed you can drive one cross-country essentially non-stop. Glad to see Hybrid's getting the love.
  • 3-On-The-Tree We also had a 1973 IH Scout that we rebuilt the engine in and it had dual glass packs, real loud. I miss those days.
  • 3-On-The-Tree Jeff thanks. Back in 1990 we had a 1964 Dodge D100 with a slant six with a 3 on the tree. I taught myself how to drive a standard in that truck. It was my one of many journeys into Mopar land. Had a 1973 Plymouth duster with a slant six and a 1974 Dodge Dart Custom with 318 V8. Great cars and easy to work on.
  • Akear What is GM good at?You led Mary............................................What a disgrace!
  • Randy in rocklin I have a 87 bot new with 200k miles and 3 head gasket jobs and bot another 87 turbo 5 speed with 70k miles and new head gaskets. They cost around 4k to do these days.