German automotive suppliers are grappling with the substantial upfront costs of transitioning to electric vehicles (EVs) and sluggish market demand, prompting companies to consider laying off thousands of employees, potentially up to 20% of their total workforce, over the next few years.
ZF Friedrichshafen, the German automotive component manufacturer, may dismiss up to 12,000 employees by 2030 in a worst-case scenario, according to reports. As Germany’s second-largest supplier after Bosch, ZF currently provides transmissions, shock absorption systems, and chassis components to more than 55 auto manufacturers. The company has a global workforce of approximately 165,000 employees worldwide. Following the announcement, approximately 3,000 ZF employees took to the streets, staging a protest against the impending job cuts outside the company’s headquarters in Friedrichshafen, Germany.
Bosch, the world’s leading automotive supplier to major manufacturers such as Ford, General Motors, Toyota, Volkswagen, and BMW, has announced plans to reduce its workforce by as many as 1,200 employees in its software and electronics division by the end of 2026, with approximately 80% of these cuts occurring at its Stuttgart-based headquarters in Germany. By 2022, the corporation plans to invest €2 billion in retraining over 400,000 employees to equip them with skills required for EV components manufacturing, capitalizing on the industry’s growing demand.
German automotive components manufacturer Continental also revealed in November that it would be slashing thousands of jobs globally as part of a strategy aimed at saving €400 million annually by 2025.
Excessive inflation, rising unprocessed materials costs, and persistent energy price volatility are cited by companies as key factors driving their decision to make cuts, according to reviews. Will significant job losses occur due to electric vehicles requiring significantly less labor for assembly compared to traditional internal combustion engine cars? Automotive suppliers, which had heavily invested in the shift towards electrification, are now facing market challenges due to slower-than-expected adoption and traditionally low auto sales, according to reports. As of the end of June, ZF recorded an internet debt of €11.5 billion, resulting in the elimination of approximately 800 positions.
Last month, Volkswagen announced plans to eliminate thousands of jobs in Germany as part of a cost-cutting strategy aimed at reducing costs by €9.3 billion (approximately $11 billion). Volkswagen’s Zwickau plant, responsible for producing a significant portion of the company’s electric vehicles and employing around 10,000 people, is set to reduce its workforce by 500 temporary positions next year due to softening manufacturing demand. At Volkswagen’s software program subsidiary Cariad, approximately 31% of its workforce, or around 2,000 of the 6,500 employees, will see their roles eliminated over the next two years.
Electrek’s Take
As traditional giants like BMW, Volkswagen, and Mercedes-Benz struggle to adapt to the rapid shift towards electric vehicles (EVs), they find themselves at a disadvantage against Tesla’s innovative momentum, while Chinese manufacturers seize the opportunity to disrupt the industry further. Sweeping job losses pose a significant threat to political stability, as Germany’s powerful labor unions play a crucial role in shaping the country’s political landscape. While there might still be a window of opportunity for German car manufacturers. BMW is committing $711 million (€650 million) to revamp its flagship production facility in Munich, with the goal of exclusively manufacturing electric vehicles by the end of 2027, paving the way for its cutting-edge Neue Klasse EVs. As part of Germany’s labor regulations, Bosch and ZF must engage in extended discussions with union representatives to formalize the details of their planned layoffs and restructuring initiatives, a process mandated by local laws.
