Electric Cars Are Killing the Traditional Auto Industry - Android

While electric cars and automated manufacturing are seen as things for the future and they will make life easier. People… Read More

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While electric cars and automated manufacturing are seen as things for the future and they will make life easier. People in the city of Öhringen, the city at the heart of Germany’s biggest industry – the auto sector – will like to disagree.

From the outside, the city looks great with an unemployment rate of just 2.3%, vacancies are open and the city government is constructing a secondary school and a hospital. A factory near the city that makes air filters for an auto parts manufacturer, Mahle is shutting down. They aren’t the only ones as companies are investing billions in autonomous driving and electric cars, which can be assembled in less time and more easily and need fewer workers and parts, as the global car sales are falling.

Multiple car makers such as Daimler, Audi and suppliers have slashed thousands of jobs in recent times and according to a professor at the University of Duisburg-Essen, Ferdinand Dudenhoeffer, German car production will be at a 22-year low in 2019 and 2020.

Jörg Stratmann, the company’s chief executive said, “For Mahle — and for the industry as a whole — the technological transformation is a monumental task.”

There are fears in the country that this isn’t just another economic cycle and there are going to be fundamental changes in Germany’s auto sector that employs 835,000 people. The increasing popularity of electric vehicles (EVs) could be pivotal in this and have a long-term impact on it.

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Presently, the sales of EVs are small in terms of the overall market. In October 2019, battery-powered cars and hybrids made up 10% of new car registrations in Europe according to JATO, a market research firm.

Sales of these cars are up by 40% from a year earlier. If the projections hold and the number keep increasing then the hundreds of suppliers that make parts for the internal combustion engine will be impacted just like the Mahle factory in Öhringen.

Bernhard Mattes, the president of the German Association of the Automotive Industry, said in an interview in Berlin, “There is a transition toward more electric vehicles that have far fewer components and are easier to manufacture,” and added “Therefore, we can expect less employment.” According to Matters, moving to EVs could cost 70,000 jobs in Germany by 2030. Some estimates are even higher.

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