In the face of climate policy requirements, digitization and new business models, the automotive industry stands at the beginning of the most radical transformation in its history.
Driven by technological advancement and regulatory requirements, megatrends such as alternative drive systems, autonomous driving or new mobility services pose major challenges to this sector of vital importance to the German and global economy, while simultaneously opening up new opportunities for growth and employment.
To date, no scientifically substantiated forecasts exist as to how electric mobility and digitization will cause employment requirements at the largest automotive companies to change.
Cooperation between business and research makes real world forecast possible for the first time
Meaningful analyses and forecasts require concrete productrelated and processrelated figures, planning data and expert assessments from a specific company’s business environment. At the initiative of its Sustainability Council, the Volkswagen Group has made such data available for the first time.
The findings of a newly published study by the Fraunhofer Institute for Industrial Engineering IAO entitled “Employment 2030: effects of electric mobility and digitization on qualitative and quantitative employment requirements at Volkswagen” can be applied broadly, since the data provided allowed the researchers to conduct a comprehensive analysis that makes it possible to draw conclusions about the entire automotive ecosystem – especially since not only one, but numerous locations in Germany were analyzed.
“Close collaboration and a trusting business relationship of the kind we enjoyed with Volkswagen is particularly valuable to us as a research institution. In this case, it generated ideas for shaping the transformation in a positive way and should encourage all of the stakeholders in the automotive industry ecosystem to approach change processes openly and cooperatively,” emphasized Prof. Wilhelm Bauer, director of Fraunhofer IAO.
Michael Sommer, member of Volkswagen’s Sustainability Council and initiator of the study, added: “As an independent body, we have pledged to advise the company and suggest strategies on how to succeed in its transformation into the world’s leading provider of sustainable mobility, while taking social, environmental and economic aspects into account. This is why we commissioned the study by Fraunhofer IAO at the end of 2019. It represents a major milestone on this path as well as an unprecedented breakthrough, not least because of its never-before-seen level of transparency. The Fraunhofer IAO team led by Prof. Bauer performed outstanding analytical work.”
Electric mobility and digitization: key drivers and their impact on employment
The study’s primary finding is that the scenario of largescale job losses, a repeatedly voiced fear, will simply not come true thanks to the planning and scenarios at Volkswagen. For example, the loss of jobs in vehicle manufacturing as a result of electric mobility will be much lower than predicted in previous global studies.
Instead, the component manufacturing sector will be more heavily affected, since the amount of work required for the electric powertrain is lower than that for conventional drive systems. The company has therefore taken strategic countermeasures at an early stage to mitigate the effects of electric mobility on employment, for example by entering new areas of expertise such as battery cell development and production. Furthermore, the study reveals that the transition to electric mobility can act as a catalyst for the automation of activities in production and logistics, which will particularly affect direct employees in these areas.
As the second key driver, digitization is likely to actually increase the number of jobs over the medium term, as its implementation is extremely complex and requires corresponding resources. This primarily applies to the segment of indirect employees.
Dr. Florian Herrmann, project manager and institute director at Fraunhofer IAO summarized the findings of the study as follows: “Analyzing Volkswagen’s own internal business data revealed that a uniform trend in employment over the next ten years simply does not exist. Depending on the area in question, new jobs may be created, eliminated or the nature of the job may change significantly.”
In this context, a distinction must be made between technology-driven qualitative and quantitative changes in employment. This is due to the fact that while forward planning can mitigate the social impact of quantitative changes in the case in question, including on account of demographic developments, qualitative changes will require a massive increase in skills and expertise in some areas.
“The multifaceted scenario revealed in study’s findings shows that the transformation resulting from the two major drivers of change, electric mobility and digitization, can be managed successfully if it is managed proactively, as in the case of Volkswagen. Now the company needs to examine the available transformation tools and measures in more detail and expand them even further,” summed up Mr. Sommer.
Automotive industry stakeholders must systematically shape complex transformation processes The entire automotive industry is facing a monumental task as a result of the transformative changes. The results of the Volkswagen study illustrate how the impact of electric mobility and digitization on qualitative and quantitative aspects of employment can be assessed using scientifically validated methods.
“We hope that other companies will follow VW’s lead and that this will create new equal partnerships between OEMs, suppliers, research institutions and politics. This involves establishing new value creation systems and sharing and securing knowledge of new business models and technologies,” said Dr. Herrmann, adding confidently: “The only way to master the challenges posed by transformation and secure value creation and jobs at the respective location is by working together.”