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Two reasons the EV transition could mean more U.S. manufacturing jobs: Vertical

A major win in the recent United Auto Workers (UAW) strike was when GM agreed to include its battery manufacturing workers under the union’s master contract. Propelled in part by this historic victory, thousands of previously non-union autoworkers are now organizing to join the UAW, including those at companies leading in vehicle electrification.

But amidst CEO assertions that building battery electric vehicles (BEVs) involves 30% less effort or a 30% reduction in hours, is there reason for U.S. labor to worry about the EV transition? We think not, for two key reasons. The Inflation Reduction Act (IRA) and Bipartisan Infrastructure Law (BIL) are helping automakers to (1) vertically integrate and (2) onshore BEV production by providing billions of dollars of incentives and investment in domestic industry. Recent research suggests this combination will support more auto manufacturing jobs, not less. In addition, growing the EV industry at home will make U.S.-made vehicles more competitive in other regions with strong environmental regulations, and looking at BEV production at the company and industry levels as opposed to the single-vehicle or component-count levels brings a different view.

FEV recently conducted a detailed analysis comparing the assembly requirements of a VW Tiguan, an internal combustion engine vehicle (ICEV), and a VW ID4, a BEV. The study found that the total labor cost (from both VW and its suppliers) for the BEV exceeded that of the ICEV. However, under current manufacturing arrangements at VW, the labor to assemble the most expensive parts unique to the BEV—the battery pack and motor—occurs outside of VW plants because these items are purchased from suppliers. That contrasts sharply with the most expensive ICEV-specific parts—the engine, transmission, and exhaust aftertreatment system—which are mostly built in-house. Given FEV’s estimated total labor requirements for BEV production exceed that of ICEV production, bringing motor, battery module, and battery cell fabrication in-house could lead to higher in-house labor hours to build BEVs than ICEVs.

A comprehensive 2022 study by researchers at Carnegie Mellon that compared the labor demands of manufacturing ICEVs and BEVs reached similar conclusions. With process-based data from automaker shop floors supplemented with public literature, the authors determined that BEV powertrains require more labor hours than ICEVs, primarily due to battery and cell manufacturing.

The question then becomes: Are automakers integrating motor and battery pack and cell manufacturing? Indeed, in their efforts to reduce BEV costs while improving performance and driving range, automakers are vertically integrating by moving battery and motor assembly in-house. Shifting from purchasing these expensive components to making them in-house reduces overall costs. So, although one CEO said “the most important thing” is to reduce labor content, vertical integration of motors and batteries signals more assembly time—and thus more in-house labor—for BEV production.

This also holds true from an industry-level perspective that considers both automakers and their suppliers. A 2021 report by the Economic Policy Institute estimated that increasing the share of domestically produced EV powertrain components to match that of ICEVs today and increasing domestic vehicle production by 10 percentage points could lead to about 150,000 additional auto parts and assembly jobs. The report relied on the single-vehicle perspective to estimate the impact of BEV production on auto assembly jobs and as companies increasingly move toward vertical integration, it may thus underestimate the amount of in-house labor required to assemble a fleet of BEVs.

More broadly, the EV transition necessitates an entirely new and substantial charging network at homes, workplaces, and public locations. That will demand significant labor hours across the country in a variety of industries, including electrical, construction, maintenance, planning and design, and charging infrastructure assembly. There are lots of good reasons to be optimistic about BEV manufacturing and jobs in the United States.

Let’s also recognize that automakers seeking to maximize profit will apply as many labor- and cost-reducing efforts to as many vehicles as possible, whether ICEVs or BEVs. Recent announcements from Ford, Tesla, and Toyota describe reducing manufacturing costs for BEVs through improving worker productivity, reducing factory size and/or complexity, increasing factory flexibility, and reducing assembly steps through vehicle component parts reduction. These improvements also apply to ICEVs, as evidenced by Toyota, Ford, General Motors, and others.

As UAW President Shawn Fain explained, the dichotomy between good jobs and green jobs is “a false choice.” We’re going to need lots of BEVs to quickly and substantially reduce the climate impact of transportation. The EV transition could increase U.S. jobs, and the keys to creating safe, stable, and good-paying jobs are union actions and government incentives and regulations. Smart public policies like the IRA and BIL invest in and expand domestic manufacturing capabilities, and others like greenhouse gas emission standards ensure that advanced vehicle technologies are developed. Together such policies can ensure that the U.S. automotive sector is globally competitive and served by a strong workforce.

This article was originally published by a theicct.org . Read the Original article here. .

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