A few days ago, an article landed in my inbox claiming that Volkswagen CEO Herbert Diess had warned business leaders that the transition to electric cars would result in the loss of 30,000 jobs. I read the story a few times and never really understood it, so I decided to put it aside and revisit it later.
I’m glad I did. Today, Reuters clarified the “who said what and when” situation. The real story is not entirely different, but neither is it quite what was said in the original report. Here is what Reuters said today: “Volkswagen CEO Herbert Diess told a supervisory board meeting in September that the company could lose 30,000 jobs if he switched too slowly to electric vehicles (emphasis added), two sources with knowledge of the matter said Reuters Wednesday.”
It’s a subtle but important distinction. Diess did not say that electric vehicles would result in the loss of 30,000 jobs. He said if the company’s transition to electric vehicles is not done quickly enough, there could be significant job losses. Competition from Tesla and Chinese companies entering the German new car market is forcing Volkswagen to accelerate its transition to electric cars and become more efficient in their construction.
A company spokesperson confirmed Diess’ position that the presence of Tesla and others in Germany increased the urgency of the transition to electric vehicles, but denied that specific calculations had been made on the number of jobs that may be lost in the process. To date, the company has made efforts to treat its workers fairly during the transition period.
Tesla plans to produce 500,000 cars per year in Germany with a workforce of 12,000 employees. In contrast, at the Volkswagen plant in Wolfsburg, the company makes more cars – around 700,000 a year – but needs twice as many workers to do so. Recently, we covered another aspect of Diess’ discussion with 120 senior executives in which he called for a drastic modernization of the Wolfsburg plant – Volkswagen’s largest production plant – to improve pre-production productivity. VW’s next wave of electric cars as part of its Trinity program.
“There is no doubt that we need to look at the competitiveness of our Wolfsburg plant for new market entrants,” Volkswagen spokesman Michael Manske told reporters this week. “Tesla is setting new standards for productivity and scale at Grunheide. A debate is now underway and there are already a lot of good ideas. There are no concrete scenarios, ”he added.
A spokesperson for Volkswagen’s workers’ council – similar to the UAW in the United States – declined to say whether Diess made the remarks attributed to him, but said “a reduction of 30,000 jobs is absurd and unfounded ”. Another spokesperson for the Lower Saxony region union, which is Volkswagen’s second largest shareholder, said such cuts were “out of the question”.
The issue of job cuts is a frequent topic of discussion when it comes to electric cars. They have far fewer moving parts (there can be over 10,000 in a conventional car’s powertrain between the engine, transmission, and differential). Fewer parts to assemble mean fewer assembly workers are needed.
And yet, Ford has just announced the hiring of nearly 11,000 new workers for its new electric truck assembly plant in Tennessee and its battery plant in Kentucky. Those who warn of job losses often fail to mention that new job opportunities are created in other fields.
New Volkswagen IPOs
In other news, Volkswagen CTO Thomas Schmall said the company is exploring a new stock offering for its battery division and may generate further investment opportunities in electric vehicle charging and its energy activity. Schmall said nothing has been decided yet and it will likely take up to two years before the new companies are created and ready for the stock market.
The auto industry is changing and manufacturers will have to move with it if they are to maximize their profits in the future. Subscription services and other new financial products will be part of these changes.
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