What does it take for electric vehicles to create jobs, not cut them?


When President Biden announced his billions of dollars… job plan in March, it included nearly $175 billion in spending to encourage Americans to buy electric vehicles.

The money would ensure that “these vehicles are affordable for all families and are produced by employees with good jobs,” according to the… white house wrote: at the time.

With Biden’s plan winding its way through Congress, a liberal think tank has sought to determine the number of jobs that could be gained or lost in the transition from internal combustion engine vehicles.

The report, released Wednesday by the Economic Policy Institute, concluded that government subsidies aimed at developing a domestic supply chain and increasing demand for US-made vehicles are needed to prevent job losses.

It found that without additional government investment, the industry could lose about 75,000 jobs by 2030, the year Mr. Biden want half of the new vehicles sold in the country are electric.

By contrast, the report states that if government subsidies were intended to increase the proportion of electric vehicle components produced domestically and increase the market share of US-made vehicles, the industry could add about 150,000 jobs by the end of the decade. .

“That’s the reward — making the industry a center of good jobs again,” said Josh Bivens, an economist who is one of the authors of the report. “If we don’t try to proactively respond with good policies, we’ll see continued downward pressure on the number of good jobs.”

Regarding the transition to electric vehicles, the fact looms that they significantly fewer moving parts than gasoline engines and require less labor to produce — about 30 percent less, according to figures from Ford Motor. The car industry employs just under a million people domestically, including suppliers.

There are essentially two ways to make up for the projected job losses: to increase the proportion of each vehicle’s components that are made domestically – particularly in the powertrain, the key components and systems that power a car – and to increase sell vehicles assembled in the United States .

Mr. Bivens and his co-author, James Barrett, an economic adviser, are exploring the effects of both. They note that about three-quarters of the powertrain parts for a US-made gasoline vehicle are domestically produced, compared to less than half of the powertrain parts for a US-made electric car.

Increasing the share of household contents in electric vehicles so that it mirrors that on gas could save tens of thousands of jobs a year, they estimate — possibly more than half of the likely job losses that would occur without additional government measures.

But to likely turn job shortages into job gains, Mr. Barrett and Mr. Bivens believe, it is necessary to increase the market share of vehicles made in the United States. According to the study, the percentage of cars sold in the United States and made domestically has hovered around 50 percent over the past decade. If it rose to 60 percent, the authors conclude, the industry could gain more than 100,000 jobs by 2030.

Instead, if market share fell to 40 percent by the end of the decade and there was no increase in domestic electric vehicle powertrain content, the industry could lose more than 200,000 jobs, the report finds.

Under the Democratic plan circulating in Congress, a current $7,500 tax credit for the purchase of a new electric vehicle would increase to $12,500. An additional $4,500 would apply to vehicles assembled at union factories in the United States. Consumers would receive the last $500 if their vehicle had a US-made battery. The details may change in light of automakers’ opposition to non-U.S. factories.

Democrats are also discussing subsidies to encourage manufacturers to set up new plants or upgrade old ones.

Sam Abuelsamid, an auto industry analyst at Guidehouse Insights, said domestic automakers had a chance to increase their market share as the industry electrified, and an expanded consumer tax credit would help.

“They are targeting many of the market segments that are selling particularly well – crossovers, pickups,” said Mr Abuelsamid. “There is definitely potential for them to regain some market share from Asian brands.”

Still, he warned that the chance to seize the opportunity could be relatively narrow as Asian automakers such as Toyota and Honda, which are lagging behind in their electric vehicle schedules, are introducing more electric offerings.

The question of whether manufacturers will establish production of electric vehicles and their parts in the United States as demand grows, and to what extent government subsidies can contribute to this, has been a subject of debate in recent years.

Dale Hall, a researcher with the International Council on Clean Transportation, a research organization, said in an interview that electric vehicles tend to be manufactured in the region where they are sold, both to save on transportation costs and to better meet consumer needs.

But his group found that there are nevertheless differences between regions: About 98 percent of electric vehicles sold in China last year were assembled in that country, while 72 percent of vehicles sold in the United States were built in-house. country was assembled. An important difference is government policy. “China provided a lot of subsidies to manufacturers in the early days,” said Mr Hall.

Zoe Lipman of the BlueGreen Alliance, a coalition of labor and environmental groups that advised the report’s authors, said a major concern in the United States was whether automakers would move production abroad.

“Many companies have made promising commitments to make major investments in this sector,” said Ms. Lipman. “It is not yet clear where they will make those investments.” Her group supports government incentives to make it cheaper to buy electric vehicles and subsidies for companies to build production facilities in the United States.

When it comes to vehicle components as opposed to final assembly, the United States seems to lag even further behind other countries. This is especially true for battery packs, which can cost around $15,000 and are by far the most expensive part of an electric vehicle’s powertrain.

According to a report this year by the Center for Strategic and International Studies and BloombergNEF, an energy research group, more than half the value of the batteries used in US-made electric vehicles attributed to foreign-based companies, mainly South Korea , Japan and China.

By contrast, the report noted that “in China, 100 percent of the value of a spent battery tends to grow locally.”

Abuelsamid and other analysts have argued that battery production in the United States will naturally increase as more electric vehicles roll off the assembly line, noting that batteries can be expensive to ship and increase their carbon footprint. Manufacturers often want parts manufacturers to be nearby to minimize supply disruptions. recent announcements General Motors and Ford that they are going to play a bigger role in battery production seems to reflect this mindset.

BloombergNEF analysts have painted a more mixed picture. The report earlier this year found that Chinese, Japanese and South Korean battery manufacturers continued to source the most valuable battery components from their home countries long after they set up assembly plants in Europe, where the electric vehicle market is growing rapidly.

But Cecilia L’Ecluse, a BloombergNEF analyst in Britain, said there had been some recent announcements in Europe of new factories making battery components.

European governments have introduced subsidies for the production of batteries.

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