Hello and welcome to your daily Charge Smart blog! Today, we will be looking at EVs and how they could spell trouble for the German economy.
Germany is a country that has long been admired for their revolutionary technology surrounding petrol and diesel engines but with this shift in technology, companies are eager to cut costs to fuel EV research. Who's feeling the impact then? Take Ohringen, it's one of Germany's premier car manufacturing provinces, it's a place where the unemployment rate is only 2.3%, ICE cars are still selling well right?!
Above: Is this trouble for the king of ICE engines?
It may seem like that on first glance but look closer and there's a few cracks beginning to emerge. Just outside Ohringen, a Mahle factory that makes air filters for ICE cars is closing down costing 240 people their jobs. Mahle makes components for cars and they are one of the companies feeling the brunt of the EV revolution. Car sales are in decline globally, which has meant that car companies are struggling to invest money into new technologies like self-driving cars and EVs which are much more straightforward to assemble and so require less workers. And since they have only a few moving parts, component manufacturers are also facing the chopping board.
Daimler, Audi, Continental and Bosch have all announced thousands of job cuts in the last few weeks as a result of German car production being at a 22 year low.
Germany's auto industry employs over 800,000 people and the recent changes in the car world make it seem like this isn't just a regular downturn in sales. The nation's future is at stake. EV sales in Europe have increased by 40% over the previous year. That's a big increase and a trend like that could put a company like Mahle out of business. A former executive at Ford Europe said that the shift to EVs could cost 70,000 jobs but some say that his estimate is a little generous.
Above: How will companies like BMW keep up with the rapid changes?
It's predicted that this shift to EVs could result in car manufacturers demanding lower prices from their suppliers and moving production of components in house rather than contracting it to third party companies. Fears are that the unemployment resulting from the closing of these factories could lead to a resurgence in the far right movement with the party receiving 10% of votes in the province where Ohringen lies.
There's another shift happening here. Germany has over 100 years worth of expertise in making ICE engines and this shift to EVs is going to wipe that slate clean as majority of batteries used in EVs are being imported from Asia. The risk here is with the companies trying to cling on to a dying technology while new manufacturers flourish by adopting EVs.
What they do now will influence which car companies are still around in 10 years time.