German OEMs concerned over phase-out of combustion engines –


The European Commission’s Fit for 55 package will quickly tighten emission standards for cars, effectively banning the sale of vehicles with internal combustion engines by 2035. German automakers had anticipated the move, but suppliers of spare parts and employees are worried.

“This is hostile to innovation and the opposite of neutral technology,” said Hildegard Müller, president of the powerful association of German car manufacturers VDA, adding that the impacts on jobs in the industry would be significant.

Its reaction to the Commission proposal lays bare the competing interests to which the VDA is indebted: on the one hand, companies like Volkswagen which assemble the cars, on the other hand the interest of the suppliers of spare parts and engines like Bosch.

Volkswagen has embraced electric vehicles and pledged to stop selling combustion engines in Europe by 2035. “Our electric offensive is gaining momentum,” CEO Herbert Diess said on July 29, as VW was showing higher profits than expected.

The image is less rosy for Germany lmajor parts suppliers, who feel under-represented in political discourse due to the dominance of the auto-manufacturing giants, a source told EURACTIV on condition of anonymity.

The end of the combustion engine means the end of decades of technological expertise and processes accumulated by highly specialized suppliers, many of which are SMEs, recent reports have warned.

Unions and works councils also want to have their say

The schism between auto assemblers and parts suppliers is further complicated by the concerns of their employees. In 2020, a report by Germany’s National Platform for the Future of Mobility (NPM) predicted a worst-case scenario that would see the auto industry lose 400,000 jobs, prompting unions to demand their say on how the transformation should happen.

The report is hotly contested and most experts agree that in this case the job losses will not be so severe. Mechanical engineering association VMDA has predicted a loss of 180,000 jobs if the combustion engine is banned in 2040.

“A few small Detroit are on the horizon right now,” warned Roman Zitzelsberger, regional leader of the metalworkers’ union IG Metall, in an interview with Context, and added that suppliers concentrated in a few locations are now facing sweeping cuts with potentially disastrous results for regions.

Jörg Hoffmann, President of IG Metall, took the example of tthe western German state of Saarland in a June 7 interview. He noted that the region has four major suppliers working in the combustion engine industry: Bosch, ZF, Eberspächter and Festo, all of whom stand to lose big from the phase-out of combustion engines.

These clusters must adapt to changing circumstances and cooperate, for example by creating a regional fuel cell cluster, he added.

Works councils, which represent the interests of employees within the company and in tandem with unions also have a say in the transition of the German auto industry.

They have a legally mandated role to play in the re-education of employees as their acquired skills are rendered obsolete by the phasing out of combustion engines. IG Metall called for a fund to help SME works councils to facilitate their role in his Fit for 55 position statement.

The transformation of the German auto industry runs far deeper than Volkswagen’s enthusiastic embrace of electric mobility, and suppliers fear their greatest source of income will be gone.

[Edited by Josie Le Blond]

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