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What does the rise of EVs mean for the global automotive workforce?

11/09/2019
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Even just a cursory glance at the media demonstrates an ever-increasing number of stories about electric vehicles (EVs), the impact they will have on energy demand, how they will lead to cleaner, greener urban environments and myriad other topics. Take a look at the automotive trade press and you’ll find it’s positively saturated with news, opinion pieces and reports about how EVs are changing this global industry. Yet there’s relatively little information about what EVs will mean for the automotive workforce. The question is, what will happen to the manufacturing workforce when internal combustion models have been phased out and electric vehicles are the new normal?
What does the rise of EVs mean for the global automotive workforce?
(Image via Tesla).

The rise of EVs: media hype or industry reality?


If the number of media stories about EVs were directly correlated with the number of EVs being manufactured and sold, then it would be safe to assume that EVs were indeed quickly becoming a disruptive force within the automotive industry. But of course, we can’t rely solely on the volume of media reports to discern a trend.

As a number of my engineering friends often ask, ‘what does the data say’?

In 2017, global sales of electric vehicles passed the one million mark for the first time (factoring in plug-in hybrid vehicles (PHEVs) too). In 2018, more than two million electric vehicles were sold. 

By any measure these figures demonstrate strong growth in EV sales - and point towards an ever-steeper upward curve. It’s a trend which is agreed upon by many of the major market analysis firms. Deloitte sees EV sales growing to ‘4 million in 2020, 12 million in 2025, before rising to 21 million in 2030’. According to Deloitte’s analysis, as EV sales grow, the market penetration of ICE vehicles will decline from 2024 onwards. Bloomberg’s New Energy Finance (BloombergNEF) research division postulates an even more optimistic take, with a recent report stating that ‘by 2040, we expect 500 million passenger EVs on the road and over 40 million commercial EVs’.
Global growth in electric vehicle sales across major international markets
(Image via Deloitte).

Aside from consumer demand and sales, a supportive policy and regulatory environment is also spurring the growth of EVs, taking them from the pages of the media to the reality of your local roads and highways. To date, approximately 20 cities worldwide have announced plans to ban gasoline and diesel cars by 2030 (or in some cases sooner). Several national level bans have also been announced including the UK government making a commitment to remove petrol and diesel vehicles from public roads by 2040 (albeit hybrid vehicles will still be permitted to be sold).

With both consumers and legislators pushing for EVs over ICE vehicles Automotive OEMs are responding in kind. Perhaps the starkest example of how the automotive industry is embracing EVs is the way in which they are now investing their incremental capex spend. Wells, Wires, and Wheels… a new report from BNP Paribas claims that 70% of automotive OEM’s incremental capex is now going in to EVs. Why? Because these OEMs have realised that investing R&D into new internal combustion engine technology is a losing proposition. Given the rapid rise of EV adoption, any new ICE technology would likely fail to amortize itself.

With major OEMs such as Volkswagen effectively shutting down investment in ICE technology and focusing on EVs, the overall cost differential between the two technologies will rapidly diminish. Mark Lewis, author of BNP Paribas’ Wells, Wires, and Wheels report believes that cost parity between EVs and ICE will be achieved rapidly, “As in our previous forecasts, we expect price parity between EVs and internal combustion vehicles by the mid-2020s in most segments, though the first segment crosses by 2022.” This has been named the ‘EV Tipping Point’.
VW's new ID.3 is the first of many pure EVs which will be launched by the German manufacturer over the coming decade.
(VW’s new ID.3 is the first of many pure EVs which will be launched by the German manufacturer over the coming decade. Image via VW).

Whichever way you look at EVs, be it from the supply or demand side, adoption and market penetration is growing, and with that comes the imperative for Automotive OEMs to change the way they configure and recruit their workforces.

The changing automotive manufacturing landscape


EVs are indeed growing then. But what impact has this new technology had on the automotive industry - one which has been notoriously difficult for new entrants to break into? Technological change does not occur in isolation - you can never do only one thing - as the saying goes. 

What may seem like a mere change to a vehicle’s propulsion has already led to a disruption of the automotive manufacturing industry. And it promises much more.
Tesla is the most high-profile of the new 'challenger OEMs'
(Tesla is the most high-profile of the new ‘challenger OEMs’. Image via Tesla).

New entrants


The most notable impact of EVs upon the automotive market has been the new entrants that have arrived on the scene over the past decade. These new entrants represent a significant threat to the status quo, with those such as Tesla very quickly gaining large market share and brand recognition amongst EV-savvy consumers. Whether this turns out to be ‘first mover advantage’ or a more sustained development remains to be seen. 

It’s understandable that Tesla receives the first mention in this section about ‘new entrants’ to the automotive industry, however it’s a raft of new EV manufacturers from China which in fact pose the biggest threat to the incumbent OEMS.

BYD, little known in the West (for now), is the world’s largest manufacturer of EVs. It may have begun life as a manufacturer of cell phone batteries, but it’s now an EV powerhouse shifting 30,000 EVs per month which are developed and built by its quarter of a million employees! It’s the company leading China’s transition to clean mobility and is one of several EV brands that you are likely to become very familiar with over the coming decade.

Chinese brands such as BAIC, BYD, Chery, JMC, JAC and Hawtai could one day become automotive brand names with the same level of recognition as Ford, Chevrolet, VW and Audi.
The future may see incumbent OEMs become 'white label' manufacturers for new EV brands.
(The future may see incumbent OEMs become ‘white label’ manufacturers for new EV brands. Image via GM).

White label OEMs


New challenger EVs brands are already outcompeting incumbent OEMs, in terms of market share, consumer adoption and technological innovation. Yet, scaling up to meet the projected demand for EVs could pose major problems for new EV brands - you only have to look at Tesla’s ‘production hell’ to see what awaits other EV manufacturers. Forecasting production capacity and investing in new factories, tooling design, innovation and talent could prove beyond the capacity of many new market entrants, which has led several industry commentators to suggest that incumbent OEMs could become ‘white label’ suppliers to newer brands. In other words, your shiny new EV could have a Rivian badge, but have been manufactured at a Ford plant in Michigan…

Regional segmentation


Gone are the days in which a handful of brands would control the majority of the world’s automotive market.

In what has been a longer-term trend, economically developing nations such as China have developed their own domestic car industries - a trend which has been accelerated by the arrival of EVs.

The result? An automotive market which is regionally segmented like never before- creating more headaches for OEMs which seek to sell their vehicles across multiple international markets.

Markets such as China and Europe are aggressively electrifying their fleets, whilst countries such as India and other emerging economies are expected to electrify much slower. The challenge for OEMs (and their workforces) will be the meet unbalanced demand from these markets for EVs and ICE models.

In other words. The whole world isn’t going electric all at once. OEMs will have to figure out how they respond to demand for different powertrain options from different regions.

EVs and the automotive workforce


We’ve seen how the rise of EVs will have a disruptive impact upon incumbent OEMs, challenging their existing market share, altering regional demand and even changing public perception of the industry as new brands emerge. But what impact will EVs have upon the workforce itself?

There are several clear trends which will influence how OEMs and new EV manufacturers compile, recruit and retain their workforces over the decades ahead. However, there’s one overarching trend which will apply to incumbents and start-ups alike - the need to invest in their workforce solutions.
EVs will have a profound impact upon the types of skills required by OEMs
(EVs will have a profound impact upon the types of skills required by OEMs. Image via VW).

New skillsets


The automotive industry is currently an enormous employer of technical and engineering talent across the globe. In Europe alone the automotive sector employs in the region of 3 to 3.5 million people (which adds up to 11.3 per cent of the EU’s total manufacturing employment). In the US just over 1 million people are directly employed in automotive manufacturing positions, while in China this figure stands at around 1.6 million people directly employed in automotive manufacture (as of 2017).

Do these various workforces have the necessary skills and experience to design, develop and build the EVs that are (and will be) demanded in the years ahead?

Not necessarily. The production of ICE powertrains requires a very different set of specialised skills and knowledge from those required to build an EV. At present, incumbent OEMs in particular do not have the talent on board they need to build successful EVs. Deloitte highlights the skills dilemma facing OEMs succinctly (emphasis mine), “Despite the number of highly-skilled workers currently employed in the industry, the design and manufacture of EVs will require a substantial investment in new talent. Working with battery packs instead of ICEs requires OEMs to increase both the breadth and depth of knowledge within their pool of engineers. The shift to EVs means that multi-skilled engineers, who are as comfortable with chemistry as they are with electrical and mechanical engineering, are required. This is a challenge as multi-skilled engineers are scarce and as such, they generally demand higher wages.

The key takeaway for Hiring Managers should be the need to foster multi-disciplinary teams especially those that pivot around mechatronics. Mechatronics is a combination of electrical and mechanical engineering and is used for designing and managing (and linking) different steps of the production process e.g. equipping cars with electronic actuators, wired and wireless communication within the car, information storage and strategic control systems.

Other areas of focus should include the sourcing of experts in IT and consumer electronics (especially if EVs also combine a level of autonomy). A study conducted by researchers Elmer-Dewitt in 2015 concluded that ‘knowledge transfer from smartphone technology components and systems will be an asset in manufacturing future electric vehicles’.

OEMs will need to change the composition of their workforces. Engineers with a broader range of skills, and specialist knowledge in battery packs, chemistry and advanced electronics should be the targets of Hiring Managers looking to secure an ‘EV ready workforce’.
The rise of EVs will require OEMs to recruit IT, electronics, chemistry and other highly qualified engineering and technical professionals.
(The rise of EVs will require OEMs to recruit IT, electronics, chemistry and other highly qualified engineering and technical professionals).

Creative destruction


Naturally, when talk arises about the need for new and more varied skillsets in an industry, there’s always accompanying talk about the redundancy of certain roles and skillsets. The automotive industry is no exception.

With EVs being generally made of fewer components, and OEMs developing modular easy-to-assemble designs, it’s likely that the automotive industry will require fewer plant and assembly workers due to the typically less-labour intensive production process of EVs compared to ICE vehicles.

The question for hiring managers is this- will EVs lead to creative destruction?

Creative destruction is defined as the process of ‘dismantling of long-standing practices in order to make way for innovation’. The changes wrought by EVs to OEM manufacturing processes certainly fit this definition. A European Commission funded research study Electric vehicles: Shifting gear or changing direction reinforces the point that EVs will be an example of creative destruction for OEM workforces - destroying jobs in one area (powertrain) and creating jobs in others (electronics). Participants in an interview for the study felt that ‘new kinds of occupations will occur as a result of the migration to EVs’. Interviewees clearly indicated that jobs in electronics and IT are to some degree going to replace mechanical jobs. 

Yes - new jobs will be created out of the ashes of redundant positions- but these new jobs will require higher levels of qualification. Another report by the European Commission in 2014 states that half of the 461,000 job openings created by the production of cleaner vehicles will require high level qualifications.
New entrants to the Automotive market are offering an attractive Silicon Valley style employment proposition to new STEM graduates
(New entrants to the industry such as Rivian offer a very compelling ‘Silicon Valley’ employment proposition to high-quality STEM graduates. Incumbent OEMs will need to match their offer in order to compete for the best talent. Image via Rivian).

The lure of the start-up


As OEMs seek to staff up in preparation of EV design, development and destruction they will face a stiff level of competition from a wealth of new start-ups. As Deloitte put it “Building the workforce of the future becomes even more challenging for OEMs when the best and the brightest science, technology, engineering and mathematics (STEM) graduates are increasingly drawn to start-ups’.

Thus, a well-crafted, considered Employer Value Proposition (EVP) will be vital for OEMs that want to secure the best new talent for their EV projects. Competing against vibrant start-ups that offer modern working spaces, remote working, unlimited holidays and other such perks means that incumbent OEMs will have to think very differently about recruiting and retaining staff. 

An electrical revolution


Already the automotive industry looks very different than it did 10 or even 5 years ago, and that’s thanks to EVs. EVs are disrupting the global automotive industry, introducing new brands, new technologies, new business models and new people. If you’re an automotive industry professional, it’s time to ask yourself, are you ready for change?

Secure the automotive workforce of the future with Fircroft


If you’re a hiring manager or project lead looking to secure the workforce of the future, then speak to Fircroft. Our range of award-winning recruitment and workforce solutions can be tailored to meet your exact requirements no matter the scale or location of your project. Contact us today for a free consultation.

If you’re an automotive professional looking for your next contract or job opportunity, explore and apply for Fircroft’s open positions now.
Tags: Automotive
Recent Comments
As a PRACTICAL Engineer (MS+MBA) with Common-Sense, I am NOT worried about automotive work-force: Same tire and window installers, same painters. Only GAS Engine guys have to have a crash-course to learn about BATTERIES and electric-motors, instead of carbs and spark-plugs. Even gas station attendants would still wash windows. My main (3) concerns on this EV mania are: 1. Extreme POWER SHORTAGES for our home AC and fridges. 2. Scary influence of this enviro-fanatics with global-warming hoax. 3. Drivers distracted by all those idiotic digital gizmos and controls. There. You had it. Print it or NOT, these are our issues.
ANDRE GURSES, 11 September 2019
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What does the rise of EVs mean for the global automotive workforce? - Time to read 12 min
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