What will we drive in the future and how many jobs will it create?

The battle over the type of cars we will drive in 2030 is heating up and so are the claims and counterclaims about the impact on jobs. This week the European Parliament voted for a 40% reduction in new car CO2 emissions between 2020/1 and 2030 much more than the 30% proposed by the European Commission. Parliament also introduced real world checks to stop the industry gaming laboratory tests.

Next week it’s the turn of EU Environment Ministers meet to thrash out a deal. 19 countries are also in favour of a 40% cut. But the Austrian Presidency have proposed a more modest 35% for which there is a clear majority. After the ambitious proposal from Parliament the car industry, unions and Germany (that supports only a 30% cut) have been furiously lobbying France, Italy, Spain, Poland and Portugal to weaken their position. If they succeed there will be a blocking group against a 35% cut and likely delays to finalise the rules that suits the industry. The next few days will therefore be crucial.

At the heart of the arguments is a heated debate about the impact of jobs of a shift to plug-in cars. A recent study by Cambridge Econometrics provides light where there has previously been heat - so what are the facts?

A shift to fuel efficient and zero emissions vehicles is good for jobs overall.

Many studies, including the European Commission’s impact assessment show if we buy less oil this is good for jobs across the economy. On average 6.4% of household expenditure is on fuel and maintenance of vehicles and cutting this cost frees up money that we spend in other ways creating jobs. A previous study by Cambridge Econometrics (endorsed by BMW, Nissan Renault, trade union Industriall, and the consumers organisation BEUC) estimates 206 thousand jobs are created economy wide by 2030. A recent European Commission paper also shows more ambitious cuts to car and van CO2 emissions and fuel use also creates more jobs.  A 30% cut creates 46-69 thousand jobs; a 40% cut 69 - 92 thousand jobs depending on whether batteries are made here or imported.

A shift to more fuel efficient cars, including hybrid and plug-in hybrid cars is good for jobs in the automotive industry

More fuel efficient cars contain more parts creating employment. A study by trade unions shows the average plug-in hybrid car requires 19% more people to build it than a conventional car. For employment in the automotive industry this is the best option as the cars continue to have engines, transmission and aftertreatment systems.

A shift to electric cars (both battery and PHEV) is good for jobs economy wide; the effect on employment in the automotive sector depends on the mix of battery electric and plug-in hybrid cars made.

Economy wide a shift to electric cars is good for jobs as less oil is consumed. The effect on automotive jobs will depend on the share of battery electric vehicles (BEV) to plug-in hybrid models. To make an electric car requires about 20% less people than a conventional cars as there are 17% fewer parts. A range of studies estimate the overall effect but the European Commission estimate the job losses in the automotive industry across the EU from a 30% cut to be 2 thousand jobs and for a a 40% cut 12 thousand jobs (0.5% of all those employed in the sector). With 900 thousand anticipated retirements incarmaking the next few years the effect is small.  An unpublished trade union study puts the losses at about twice this level - but the effect will be small overall. Overall if there are similar levels of battery electric and plug-in hybrid cars there won’t be any job losses in the automotive sector at all and jobs may be created in this sector as well as the rest of the economy.

China the real risk to jobs

The real risk to jobs is that in the future electric vehicles would be supplied from China and not built in the EU. Last year European carmakers invested seven times more in electric vehicle manufacturing in China than at home. Carmakers’ intention is clear, keep selling diesel cars in Europe for as long as possible. In the meantime it will meet the limited EU demand for electric cars with vehicles largely made in China. It is a strategy focused on maximising profits and will be disastrous for the global competitiveness of the European industry and the creation of the jobs of the future in Europe.

Another  big risk to jobs comes from automation of cars. 3.5 million people are employed driving vehicles in the Europe. If they are replaced by autonomous cars there will be huge numbers of taxi, bus, lorry and van drivers looking for new jobs.

A shift to fuel efficient and electric cars will be good for drivers lowering car fuel and maintenance costs - a 40% cut in CO2 will also produce a €700 per year saving in fuel prices. Overall buying less oil will create jobs and even in the automotive sector the effect is unclear depending on how many battery electric cars to plug-in hybrid models are sold. It is expected trade unions fight for every job and carmakers want as little regulation as possible. But Governments need to think about their citizens that a recent survey shows 40% want to plug-in their next car. Next week we will see what EU countries think and whether they care more about people or car companies.

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About the author

Greg Archer's picture

Director, Clean Vehicles