Germany’s Transition to EV-Land Sounds Slightly Unpleasant

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Yesterday, we discussed Volkswagen trouble in finding the perfect recipe for affordable electric cars. Today, its BMW’s turn, and a broader look at how electrification is affecting Germany on the whole.

Reducing auto emissions has become immeasurably stylish in countries across the globe, with Europe doing some of the heaviest lifting via stringent regulatory measures. As a result, Germany’s automotive sector intends to go green and push EVs to the forefront. While BMW may not have committed itself to electrification quite so thoroughly as Volkswagen, the company isn’t sitting around while the competition does everything. The company is making concerted efforts of its own. Still, there are drawbacks to upending established supply chains and dumping a fortune into developing an entirely different type of car. 

Bloomberg did a stellar analysis of BMW’s current situation this week, loading it with pertinent data, and painting a pretty mixed picture. It’s a picture that’s representative of the industry overall. Internal combustion engines are complex, heavy, and loaded with moving parts that have to be sourced and assembled. For electric cars, the big-ticket item is the battery.

Despite Germany and France having pledged a combined 1.7 billion euros in subsidies to finance battery research and development in their respective countries, Asia already has the market cornered. Europe will have battery plants of its own, but China will dwarf them in terms of overall production for the foreseeable future. That, in addition to the less complicated nature of electric motors, means German automakers aren’t going to need quite so many hands.

From Bloomberg:

Last month, expecting a 10 percent slump in profit this year, the company said it would begin a 12 billion-euro efficiency campaign to pay for this battery-focused revamp. Starting in 2021, meanwhile, BMW plans to eliminate up to 50 percent of drivetrain options.

About a third of its 133,000-strong workforce has been trained to handle production of electric vehicles — and it’s clear that all of today’s employees won’t be necessary for tomorrow’s tasks.

Like Volkswagen, BMW intends to dramatically simplify its engine offerings in the coming years. Bloomberg’s anecdotal evidence may spark concern for frontline workers, but it’s the research that concerns us the most. A joint study from the Fraunhofer Institute for Industrial Engineering and Germany’s incredibly powerful IG Metall union estimated that 75,000 of the 210,000 positions responsible for manufacturing German’s engines and transmissions will be obsolete by 2030. But only around 25,000 are presumed to be created thanks to EVs.

That, in addition to aggressive cost-cutting measures aimed at freeing up capital for mobility projects and EV development, effectively means electrification kills jobs. But this is the part where we tell everyone to postpone their freakout.

While widespread electrification is absolutely coming, assuming it will automatically end the internal combustion era overnight still feels like a stretch. Automakers, especially those from Germany, are pushing aggressively into the world of EVs and want to make their sale a substantial portion of their annual production volume in just a few years. And yet EV sales have remained borderline superfluous and could be laughed off, were they not steadily gaining ground — modest though it might be.

Incentivized or mandated by governments across the globe, EVs sales will continue to grow, but no one knows how long public acceptance will take or how complete it will actually be. Electric cars could spend decades as little more than an interesting alternative to gas-burners, stymied by slower-than-anticipated development and a lackluster charging infrastructure, or become completely entangled with ICEs through hybridization — a likelier outcome.

Consumers will still have the final say, which we hope is something automakers and their respective countries accounted for in their planning.

[Image: BMW]

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