Experts Puncture Perception That BEVs Will Cost Auto Jobs

ANN ARBOR, MI – One enduring narrative around the adoption of battery-electric vehicles is that it will lead to the elimination of thousands of manufacturing jobs since BEVs have fewer moving parts than those powered by internal-combustion engines.

But Elaine Buckberg, senior fellow at the Salata Institute for Climate Change and the former chief economist at General Motors, says that narrative is full of holes, and the adoption of BEVs actually could lead to the creation of more jobs.

New jobs in BEV manufacturing involve batteries, drive units, cooling systems and additional electric monitoring, according to Buckberg. “These new (B)EV propulsion jobs offset or exceed eliminated jobs in engine and transmission manufacturing,” she notes during a presentation at the University of Michigan’s Annual Economic Outlook Conference here.

“Batteries are very complex,” requiring more hands to assemble them, notes Buckberg, who also served as Deputy Assistant Secretary for Policy Coordination in the Department of Treasury’s Office of Economic Policy in the Obama Admin.

Assembly labor is comparable because the complexity of tasks, not just the number, must be considered. So does supply-chain labor, Buckberg says, citing studies by the Boston Consulting Group, the University of Michigan and Carnegie Mellon University in Pittsburgh.

The “labor intensity has increased at U.S. vehicle assembly plants that have fully transitioned to assembling battery-electric vehicles.” according to a separate study by U-M researchers.

U.S. auto plants producing BEVs have required a larger workforce than traditional ICE plants, the U-M researchers found. They indicate that plants in the ramp-up stages of transitioning to full-scale BEV production have seen assembly jobs increase as much as tenfold.

“There is a shortage of information out there about how the (BEV) transition is shaping up,” says Anna Stefanopoulou, the William Clay Ford Professor of Technology and senior author of the study. “What we’re seeing, with the data that’s available, is that the loss of employment predicted for (B)EVs is not happening,” she writes.

The U-M study says researchers identified three plants that have transitioned from building all ICEs at one time, to manufacturing all BEVs, including Tesla’s factory in Fremont, CA, a former joint venture between General Motors and Toyota; Rivian’s plant in Normal, IL, once operated by Mitsubishi; and GM’s Orion Township, MI, plant.

The U-M researchers note that the Tesla plant in Fremont has built BEVs for more than a decade – and the number of workers needed to make each vehicle has remained three times higher.

Previous estimates of what BEV manufacturing would mean for autoworkers projected a 30%-40% loss of 200,000 jobs or more. The figure is included in a study of BEVs’ impact on auto industry employment released by the UAW in 2018.

While BEVs require about 100 fewer parts than their ICE counterparts, and their powertrain designs are far simpler, earlier calculations on BEV employment did not consider transmissions, exhaust and cooling systems, leading to the expectation that assembly jobs would be lost.

“It’s a number that has been repeated by a lot of big names in the auto industry,” says Omar Ahmed, a U-M graduate student research assistant and a co-lead author of the study. “But if you look closely, no one’s really done the work to look at real plants that have transitioned from building ICE vehicles to building (B)EVs,” he adds.

“Our work shows clearly that the number of assembly workers in the plants has increased in many cases,” says Andrew Weng, a U-M research fellow in mechanical engineering and co-lead author of the study. “However, the jury is still out in terms of parts-manufacturing jobs, which will largely depend on where battery cell manufacturing takes place.”

A Carnegie Mellon study says vehicle electrification may lead to more manufacturing worker-hours per vehicle produced since BEV powertrain production has reached sufficient scale to absorb displaced ICE powertrain workers.

Battery manufacturing will be a primary driver of BEV employment opportunities, the Carnegie Mellon study observes.

Buckberg says the wide disparity between U.S.- and Chinese-made BEV prices results in part from factors inherent in the two nations’ markets, like China’s significantly lower labor costs and real estate prices, and reduced costs of processing raw materials due to lower environmental standards.

Chinese carmakers, many of which are fully or partly government-owned, also benefit from generous subsidies and tax breaks. 

Buckberg adds the Chinese “use case” is different. Many models sold there would not be attractive to U.S. buyers because Chinese drivers tend to take shorter trips at slower speeds than their U.S. counterparts. That means inexpensive vehicles with less power and shorter range are attractive there but might have trouble finding buyers here, she says.

The transition to BEVs offers another overlooked benefit: Reduced U.S. vulnerability to macroeconomic shocks from oil price volatility and geopolitical risk. The transition may shift U.S. energy consumption away from crude oil to self-sufficient sources that power the country’s electricity grid.Over time, BEV owners can expect lower and more stable average fueling costs recognizing that electricity pricing may vary locally. Avoiding gas price shocks should reduce consumer resistance to BEVs, according to Buckberg.