Herbert Diess is not as pessimistic as Ola Kallenius about job cuts in the electric age

Will electric age affect the jobs?
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Ola Kallenius surprised everyone a few months ago when he said that Daimler would become a smaller company in the electric age. Kallenius justifies this by the fact that an electric car has only 200 components compared to 1200 with a heat engine. His rival, Herbert Diess, VW CEO, thinks that the situation is not so dramatic.

In July 2021, Mercedes re-evaluated its electric strategy and announced that will abandon the heat engine in 2030 where market conditions allow it, 9 years earlier than announced at the October 2020 shareholders’ meeting. Mercedes also announced that in 2025 50% of sales will be electric and Plug-In Hybrid compared to 25% as originally planned.

Ola Kallenius declared for auto motor und sport magazine: “Electromobility is gaining momentum – especially in the luxury segment, where Mercedes-Benz is at home. The turning point is approaching and we will be ready when the markets switch completely to electric cars by the end of the decade”.

From 2025, Mercedes will launch three new electric platforms: MB.EA, AMG.EA and VAN.EA . These will be added to the MMA platform,  and the first model on this platform will debut in 2024. MMA (Mercedes Modular Architecture) is dedicated to models up to C-Class (inclusive) and is the only one that will allow the adoption of thermal engines.

Kallenius announced that the investments will be redistributed to “make the accelerated transformation profitable. I am convinced that we can do this with our highly skilled and highly motivated workforce.” But on August 1 he declared in Welt am Sonntag that the workforce would shrink again by 2030.
“You have to be honest with the people: assembling an internal combustion engine involves more work than building an electric axle,” said Kallenius. “Even if we built the entire electric drive train ourselves, we will employ fewer people by the end of the decade,”

A study by the consulting firm Boston Consulting group (BCG) estimates that the switch to electromobility will not affect any jobs and that they will be relocated. “The fact that a diesel engine is built by 3 people and an electric motor by only one person applies only to the propulsion system but not to the whole car”, said Daniel Kupper from BCG in Handelsblatt.
“The amount of work required to build a complete electric car is almost as high as for a car with a combustion engine.”

Kallenius admits that the transformation leads to the creation of new highly skilled jobs. Kupper mentions battery cells, power electronics and thermal management. But the big problem is that European manufacturers do not produce their own battery cells that are delivered by suppliers in Asia. For example, Mercedes has partnered with Farasis and CATL to build new plants in Europe. The CATL plant in Thuringia, one of the 8 battery plants planned, will employ 2,000 people but they are not Daimler employees.

On the other hand, the head of VW, Herbert Diess, told the dpa agency that all the negative scenarios are sometimes excessive. We will remain a carmaker. The production of cars will continue to be the main activity of the VW group also at the end of this decade even if the cars have changed a lot.

“We will need a lot of people to build more cars by 2030,” Diess said. And many of them will do the same activities as today. Maybe the processes will be more automated. VW will also grow in the area of ​​software with  new employees. But in the face of fast-changing industries, the change in the auto industry is taking a long time. Two life cycles last 15 years. Tesla arrived here after 15 years of intense work.

“If we do the right thing, we will save an important part of our jobs, we will increase in some areas and we will decrease in others. Already 70% of suppliers have easily gone through this transformation. Seats remain seats, steel remains steel, wheels remain wheels, brakes remain brakes”, said Diess emphasizing that a car means more than propulsion.

Herbert Diess says that the engine does not consume the most work. “An engine has a production time of around an hour in our house, compared to 20 to 30 for a vehicle”.
But those 20-30 hours include also the production of batteries that VW does not make itself. Diess is not talking about batteries but is thinking about them and wondering if VW will remain competitive with Asian competition in the field of batteries.