While politicians talk green jobs, carmaking regions seek to limit the damage

Europe’s car-producing regions know that decarbonisation will hit the traditional car industry hard and result in thousands of job losses. For them, the name of the game now is how to limit the damage, and how the EU can help.

A Committee of the Regions conference held in Brussels on 22 May brought together experts and industry players from the 36 regions of the ‘Automotive Regions Alliance’ – a group that focuses on how car manufacturing regions can navigate Europe’s decarbonisation journey.

For these regions, the future of European car-making is critical.

“The automotive industry … generates over 7% of EU’s GDP and around 13.8 million people work in it, creating important multiplier effects in supplier industries” explained Emil Boc, chair of the CoR’s commission for territorial cohesion policy and EU budget, and mayor of the Romanian city of Cluj-Napoc.

A just transition for car manufacturing

As Europe approaches the Parliament elections in June, all centrist parties are focused on the new economic and employment opportunities that will flow from the continent’s decarbonisation drive. However the transition brings risks as well as opportunities for European car makers.

In recent decades European car manufacturers have focused heavily on perfecting the internal combustion engine, but zero-carbon electric vehicles do not require this technology. Conversely, electric cars depend heavily on batteries, where other global players, such as China, have established strong positions.

Rico Chmelik, managing director at Automotive Thüringen, a cluster of the automotive supply industry in east Germany, focused on the employment and industrial implications of the switch to electric vehicles for European manufacturers.

He presented analysis showing that electric cars require fewer parts than internal combustion engines. Some existing car parts can be retained or modified, but in many instances entirely new technology is required. Parts currently produced by European players will no longer be needed.

Source: Vehicle parts structure transformed by electromobility, Chemnitz Automotive Institute (CATI), automotive thuringia, 2019

This is most evident in the drive train segment, where just 16% of existing components can be retained.

Chmelik maintained that there is still potential for growth in the interiors, electrical, and electronic systems segments. However he acknowledged that the employment impact of the transition to electric cars will be predominantly negative, for most of the districts in the Thuringia region.

Source: Impacts of electromobility effects on employment at local level in Thuringia, Chemnitz Automotive Institute (CATI), automotive Thuringia, 2020

Benjamin Frieske, a scientist at the German Aerospace Center (DLR), presented a study looking at the effects of car electrification on value creation and employment in the state of Baden-Württemberg.

The study found that the region will lose between 8 to 14% of automotive jobs by 2030, and 30% of such employment will be gone by 2040. This corresponds to 155,000 lost jobs.

Opposition to the internal combustion engine ban

This bleak outlook may explain in part why not all regions accept that the sector needs to fully transition to electric vehicles. Representatives from the Italian regions of Abruzzo and Lombardy in particular focused on the EU’s de facto ban on internal combustion engines, which will kick in from 2035.

“Our future cannot be just electric,” said the president of the Abruzzo region, Marco Marsilio, citing “the most vulnerable citizens who cannot afford electric vehicles”.

In the same line, Guido Guidesi, Lombardy’s minister for economic development, defended “the use of multiple power sources including biofuels” as “fundamental for achieving the environmental objectives set by EU and, at the same time, for the social and economic stability of our territories”.

When finalising the internal combustion phase out, the European Commission acceded to a last-minute demand from Germany and left the door open for the technology after 2035 – if engines run exclusively on CO2 neutral fuels.

Italy asked for a parallel exception for biofuels but the Commission refused, as it does not consider such fuels to be carbon neutral.

[Edited by Donagh Cagney/Zoran Radosavljevic]

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