By on October 13, 2021

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]

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36 Comments on “Dual Realities: VW CEO Claims Slow EV Shift Could Cost 30,000 Jobs...”

  • avatar

    Increased use of AI and automation is going to reduce the manual labour workforce substantially. That’s going to happen regardless of the power source driving our automobiles.

    • 0 avatar

      More importantly outsourcing has sent so many jobs outside this country. Automation and AI also happens in China, but they get all the jobs from America. It is so funny reading simple minded comments about AI and automation impacting jobs in America, but not in China.

      • 0 avatar

        @pmirp –
        Yeah, offshoring is a bitch…

        “More than 300,000 American jobs have been lost to offshoring and trade during Trump’s presidency, as certified by the Labor Department”

        But hey, what about those simple-minded comments?

        • 0 avatar

          Lou_BC, outsourcing did not start with Trump. I did not place blame on any one specific, just simple minded people.

          But I can. As a Boomer it is squarely on my generation and the investor class amongst them who started this nonsense. We outsourced the future of our country for short term profits. Call center jobs. Manufacturing jobs. IT jobs. You name it. That meant fatter margins in short term, but the mess that we are now facing.

          It also has some to do with green policies. Not in my backyard. So we ask China to do all the dirty stuff, so we can say our back yard is clean.

          But blame it on me and my generation. It is just not AI and automation. As I said, that stuff happens in bunches in China too. We have outsourced our future generations growth and employment opportunities. Just like we are letting investor companies buy homes and we are selling out the future of our younger generations who can buy homes at expense of those who have investments and fund the investor companies who take homes for sale off market and then rent.

          • 0 avatar
            Rick T.

            Nixon went to China in 1972 when the oldest Boomer was only 26. NAFTA was signed in 1992 when the oldest Boomer was 46. The Boomers didn’t start this “nonsense” but certainly bear some responsibility for continuing it although I’m not sure how it would have been reversed.

          • 0 avatar

            Statistically the percentage of jobs lost to outsourcing is in the range of 5 – 10 %. That means 90-95% was lost to automation and technological change.
            I’ve seen it first hand in the forestry/lumber sector. A mill that employed 1,000 men is now running with 150 men at triple the output.
            I agree that executives sold our souls to the Chinese in the name of profit. But truth be told, most will whine but still fill their shopping carts at Walmart.

    • 0 avatar

      Automation has been eliminating manual labor since the dawn of the industrial age. Nothing new there.

      AI, however, is a different beast. AI will definitely replace some of the manual paper-pusher type jobs (eventually), but AI seems woefully short of being able to not only create “new” ideas – but new ideas that humans actually want. Creativity is solidly the domain of human brains and will probably be for decades.

      The best AI currently available has the intelligence of roughly a 4-5 year old. Most “AI” isn’t – it’s just fancy automation.

      Really useful AI that can rival the best human intelligence is a bit like fusion reactors – always 5-10 years away.

      • 0 avatar

        @zerofoo: I’m an actual neuroscience and AI researcher. I’m definitely at the bleeding edge of AI research.

        “Most “AI” isn’t – it’s just fancy automation.”
        You are correct. For current AI, that is totally true.

        “Really useful AI that can rival the best human intelligence is a bit like fusion reactors – always 5-10 years away.”

        I’ve got a better analogy. For myself, I think of the journey to creating what I think of as the next generation of AI as a hike across the Himalyas. Everyone is in the foothills thinking that’s what the whole hike is going to be like. I’m part of a group that’s gotten a bit ahead and seen Everest in the distance.

        “The best AI currently available has the intelligence of roughly a 4-5 year old.”

        Not even close. Maybe C.elegens which is a nematode. Getting to fruit fly levels would be a massive advance.

        I’m in the process of getting a neuroscience education. In addition to that, I have to be a hardware and software engineer. Current models of computing aren’t going to get the job done.

  • avatar
    SCE to AUX

    As usual in MP’s articles, there are (at least) two stories here:

    1. EVs don’t require as much labor to build.
    2. VW is worried that competition will cost it jobs.

    My responses:
    1. Car mfrs don’t run jobs programs or charities. They serve the shareholders. $1 profit from a battery cell is just as good as $1 profit from a piston, especially if the battery is an easier sale in the future. PCs wiped out the typewriter business, too.

    2. It is remarkable that VW is worried about Tesla. But VW – more than anyone else – is all-in on EVs while everybody else talks. Their candor about the situation indicates how serious the competition is shaping up to be. The unions will have to play ball or else nobody will have a job.

    • 0 avatar
      Matt Posky

      1. I think companies are looking at how much they’ve saved on labor by having rolling layoffs while asking more people working form home and made some obvious conclusions. The same is true with the government push for EVs. They see the “free” money being placed on the table and the penalties they’ll be on the hook for if they can’t comply with emissions. CEOs care about investors and profitability, not the average employee.

      2. VW has spent loads marketing and developing EVs but the actual products have not panned out. If I were VW, I would also be worried about Tesla.

      3. I still feel the transition to EVs has been forced, irresponsibly handled, and has thus far failed to deliver truly competitive vehicles (with a few exceptions). I wouldn’t mind them obliterating jobs as much if they were actually benefiting more consumers or it was all being done within a freer market. Nothing makes me more nervous than planned economies.

      • 0 avatar

        “ VW has spent loads marketing and developing EVs but the actual products have not panned out.”

        Huh? VW has 4 of the top 10 best selling electric vehicles in Europe, including the best selling vehicle for August.

    • 0 avatar

      @SCE to AUX – Yes. Lost jobs due to new technology and due to not implementing new technology quick enough are separate issues.

    • 0 avatar

      Speaking of Volkswagens, what does “I D. 4” really mean?
      My guess is it’s an abbreviation of “I donotwanttobuyavolkswagen 4”.

  • avatar

    If enough of them learn to code, they may be able to get autonomous driving to work.

  • avatar

    Volkswagen should be worried about Tesla – seeing how one of the bigger issues historically with VWs has been electrical problems, I can imagine how much “fun” their electric cars will be.

  • avatar
    Jeff S

    More automation means less jobs with lower costs and more profit. This is happening now and will continue to happen. Additionally quality is improved.

  • avatar

    Not sure where all the confusion is. VW is just warning the unions that if they don’t get in line with the shift to electric cars and higher productivity, VW will lose market share and end up losing more jobs than they otherwise would. Old school manufacturers like Ford and GM that struggle to put together a competitive gas vehicle are similarly in trouble – especially if the source of over 100% of their profits gets targeted (pickups).

    • 0 avatar

      “Old school manufacturers like Ford and GM that struggle to put together a competitive gas vehicle are similarly in trouble – especially if the source of over 100% of their profits gets targeted (pickups).”

      They have been playing nicely with the political administrations at least since 2008, unless the plan is to liquidate them I doubt their cash cow is going to be a target of the US government’s various tentacles.

  • avatar

    The auto industry will loose jobs because electric vehicles require fewer workers in the factory to assemble and fewer workers in the field to maintain them. However, there should be opportunities in electrical generation and transmission since, at least in the United States, the electrical grid isn’t up to the increased load that a full transition to electric power will impose. The question is whether the country will invest in an upgraded grid or tolerate poor and deteriorating service.

  • avatar

    The first jobs displaced by AI will be the grunt-level coders. Wrench turners and hand-eye coordination workers will be on mandatory overtime.

    • 0 avatar

      I’ve been hearing this ever since my career in IT began during the malaise era. Yes, it may happen. But it hasn’t happened yet and I don’t expect it any time soon.

  • avatar
    el scotto

    I’ll go ugly early and be completely non-pc. How many guest workers does VW employ in Germany? What are the odds the guest workers will be the 1st to be laid off? How many plants does VW have in former Iron Curtain countries? How hard would it be to ship that capacity/capability back to Germany? Finally, doesn’t one of the German states have a sizable investment in VW? Go Posky, Go! The perfect TTAC storm of MetalwerkAG, VW, and the German state.

  • avatar

    While VW is concerned with losing 30,000 automotive jobs, USA is creating 1,000,000 new automotive jobs:

  • avatar

    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.

    • 0 avatar
      Steve Biro

      “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.

  • avatar

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

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