The electric car has become so popular that it could cost 3 million auto industry jobs in the next three to five years, according to a prominent analyst.
Morgan Stanley’s Adam Jonas said in a research note Friday that the auto industry is going to see serious, widespread changes to its labor force. Jonas said electric vehicle production will lead to heavy workforce cuts as companies like Elon Musk’s Tesla push big automakers to make them part of the mainstream.
“As auto companies shift production towards electric vehicles, we expect increased pressure on a 100-year-old auto ecosystem supporting millions of jobs globally…representing a risk to labor relations, earnings and the balance sheet,” he said.
Jonas earned a wide following on Wall Street for his early calls on Tesla, as well as his thoughts on electric vehicles. He recently has begun highlighting how electric vehicle start-ups are challenging automakers by transforming the way cars are made.
Morgan Stanley estimates that the global auto supply chain employs “in the range of 11 million people.” Jonas pointed to recent statements by VW Group CEO Herbert Diess, who said it takes 30 percent less labor to produce an electric vehicle than a similarly priced car that has the traditional internal combustion engine. This would result in a headcount cut of more than 3 million workers from the global auto industry.
But that number could increase, Jonas said.
Jonas said tech start-ups like Tesla and Rivian could build electric vehicles at “a 50 percent reduction in direct labor … or more.” That would reduce the global auto supply chain labor force even further. Even at just a 30 percent cut, Jonas estimates the labor force reduction would cost automakers “collectively and over time upwards of” $60 billion.
Maintenance and servicing for electric vehicles is less expensive than traditional cars, another consideration in terms of the labor force needed as the switch to the newer cars continues.