Major German car suppliers warn higher EU climate target will cost many jobs

Raising the EU climate target will lead to job losses in the German car industry, the world's largest industry supplier Bosch and rival Schaeffler have warned. "In order to achieve the current target of minus 37.5 percent in CO2 emissions from passenger cars compared to 2021, we need around 30 percent electric vehicles in 2030. If we want to achieve minus 50 percent, this share doubles. This has dramatic effects, also on employment," Bosch CEO Volkmar Denner told Welt am Sonntag. Denner added the amount of work needed to produce an electric propulsion system at his company is ten times less when compared to a modern diesel engine. Denner said component factories experienced the largest shift because many carmakers now produce their own electric motors and batteries. "This means that the overall pie is getting smaller, and the piece of the pie for the suppliers is also shrinking due to this massive insourcing." He said the European Commission's proposals for new emission rules (Euro 7) "are so massive that they can no longer be fulfilled with a combustion engine at justifiable economic cost."

The European Commission aims to revise the CO2 limits for passenger cars as part of its "Fit for 55 package" to reach a new 2030 climate goal. It has not yet proposed a concrete fleet-wide carbon emissions reduction target and is expected to do so only by June 2021.

The head of Bosch rival Schaeffler, Klaus Rosenfeld, told the Frankfurter Allgemeine Sonntagszeitung he didn't see any immediate indications for a wave of bankruptcies in the supplier industry. "But I do believe that the industry has a massive need to adapt. There will be a selection process now that the development is obviously moving away from the combustion engine towards the electric motor. That's why jobs will be lost, there's no question about that," Rosenfeld said. Asked about the new EU climate targets, Rosenfeld warned: "Climate protection is an important priority, but has to remain manageable. And at some point you reach your limits. It doesn't help anyone if you overdo it."

The automotive industry directly employs more than 800,000 people in Germany. Only last week, a study commissioned by Volkswagen found that the shift to electric mobility will cost fewer jobs at carmakers than many experts and unions assume, but it also indicated that the supplier industry could face significant job losses. After a slow start, the sale of electric vehicles has risen rapidly in Germany in the second half of 2020. EU leaders agreed this month to raise the EU's 2030 CO2 emissions reduction target to at least 55 percent from the previous target of 40 percent.