The global auto market is undergoing profound changes as technological advances impact everything from the products offered to the factories they are made in. The shift toward zero emission vehicles, just one of many changes hitting the industry, is creating economic opportunities and disruptions along the auto manufacturing value chain and its related industries. Policymakers and the U.S. auto industry can capitalize on this opportunity to create jobs and provide fuel and maintenance savings for consumers while ensuring the country remains competitive in the global auto market. Additionally, this action is in line with what climate scientists say is necessary to reach internationally agreed upon emissions reduction goals in order to avoid the worst impacts of climate change.
Founded in 2011, Climate Nexus works to change the conversation on climate change and clean energy from an argument to a constructive search for solutions. We use science to support our stories, and draw from other fact-based sources like economic, legal and scholarly analysis.
The transition to electric vehicles (EVs) will lead to thriving new industries and job opportunities, along with potential shifts in jobs for those working in internal combustion engines. Federal and state support through policies that provide worker education and retraining, along with policies that encourage the growth of a domestic electric vehicle market, can secure the country’s foothold in these emerging industries while minimizing job disruptions.
The advent and increased diffusion of electronic, digital, and automated technologies is changing the face of the entire U.S. workforce, irrespective of the growth of electric vehicles, and has been a primary driver of manufacturing job loss over the last two decades. The transition to autonomous and digitalized transport will impact up to 9.5 million jobs in the United States — or more than 1 out of every 20 workers.
According to labor advocates however, job loss around the transition to electric vehicles can be minimized or avoided by incentivizing domestic manufacturing of electric vehicles and otherwise positioning the U.S. as a leader in the production of advanced vehicle technologies.
The growth of the electric vehicle industry, and the parallel industries and jobs that it will spur — charging infrastructure engineering, battery manufacturing, software development, machine learning, data science, etc. — could lead to a net increase in jobs if companies position themselves for this emerging industry. According to the National Renewable Energy Laboratory, the growth of electric vehicles could lead to an average net employment gain of over 100,000 jobs per year through 2040 and the Boston Consulting Group expects self-driving and electric cars to create 100,000 jobs in the next decade. In order to meet the demand for these new jobs, the public sector, industry and educational institutions will need to devote the necessary resources to worker education and training.
This is not the first time that government support will prove a critical component of getting a new industry off the ground. In 1958 the Defense Advanced Research Programs Agency, the research arm of the Defense Department, funded the world’s first global satellite navigation system, called Transit, which served as the precursor to the GPS system that the agency later launched in 1996. The Defense Department also led the early research that gave us the internet. These lessons can be applied to the early public support of the electric car market. In addition to mechanisms for early support, states like New Mexico are passing legislation that includes funds to be used specifically for training workers who lose their jobs in the transition to cleaner forms of energy.
The expected growth of new industries spurred by the rise of EVs is leading to a surge in investor capital in everything from next-generation batteries to charging equipment. Storage batteries — for both EVs and the power sector — are expected to reach $620 billion by 2040 according to Bloomberg New Energy Finance.
Rolling back federal standards that lead to more efficient and clean-running vehicles risks jobs, safety, and competitiveness. The Trump administration’s own analysis shows a net decrease of 60,000 auto sector jobs resulting from their proposal to roll back clean car regulations.
With the sale of electric cars picking up speed and auto companies pouring record amounts of money into the market, all signs are pointing to an electric future.
The world needs to rapidly decarbonize the transportation sector in order to avoid the worst impacts of climate change. Transportation accounts for 15% of global greenhouse gas emissions and is the largest source (at nearly 28.5%) of U.S. greenhouse gas emissions as of 2016.
The latest report by the International Panel on Climate Change (IPCC), comprised of the world’s leading climate scientists, along with the U.S. congressionally-mandated National Climate Assessment (NCA), spell out the devastating impacts that climate change has already had and is expected to have if we do not drastically reduce emissions. The IPCC calls for a swift shift toward electrified transit in the next decade.
In just the last few years, nine countries, including China, France and the UK, along with various cities and states have announced eventual bans on internal combustion engines.
Global automakers are investing an unprecedented $300 billion in electric vehicle technology over the next ten years including $11 billion by Ford and $8 billion by GM. The latter is doubling its resources dedicated to electric and autonomous vehicle technology. Overall, automakers are planning for nearly 100 additional electrified models by 2022.
In 2018, EV sales grew 81% in the U.S. and in Norway pure EVs and plug-in hybrids reached half of all car sales. The International Energy Agency’s 2018 World Energy Outlook’s bullish scenario says up to half of the global car fleet will be electric by 2040. Bloomberg New Energy Finance expects 33% of the global car fleet to be electric by 2040 and that EVs will start to be cost-competitive without subsidies starting in 2022 due largely to the plunging costs of lithium-ion batteries Deloitte also predicts that cost-parity will be reached by 2022.
An increasing number of the world’s major oil companies have started to invest in EV charging infrastructure. Exxon is currently weighing a potential move following investments by Shell, BP and Chevron.
Various efforts are underway by the Trump administration and the oil industry to thwart the growth of low and zero emission vehicles in the U.S., ceding technology leadership and job creation to other countries, namely China.
Already, over 45 percent of automakers’ $300 billion in planned electric vehicle investments are earmarked for China, which is offering robust incentives to the growing industry.
The Trump administration has signaled its intent to end federal subsidies for electric vehicles. Research shows that ending incentives for EVs prematurely can harm their growth. Meanwhile, GM, Nissan, and Tesla are all lobbying the government to lift the cap of the federal EV tax credit.
Regulatory changes to the auto industry by the Trump administration, such as the proposed rollback of federal fuel efficiency standards — pushed by the nation’s oil industry — create uncertainty for U.S. automakers and could put them at a disadvantage in a global market that is trending towards more efficient and electric vehicles. In the European Union for instance, average fleet emissions regulations necessitate that EVs reach 10 percent market share by 2025. Deloitte predicts that the increased competition amongst EV manufacturers means those that are most equipped to capture market share, via long-term strategies and other measures, will be the ones to thrive.
The Trump administration’s tariffs on imported steel and aluminum has also increased the cost of domestic vehicle manufacturing and by one estimate could cost the U.S. almost 5,000 jobs in motor vehicles and parts.
While the auto industry lobbied the Trump administration for greater flexibility around fuel efficiency standards, it did not want a complete rollback of the federal standards, and major automakers are pushing ahead with their plans to significantly boost their electric offerings.