Proponents of President Joe Biden’s $2.3 trillion infrastructure plan have focused on the promise of creating millions of jobs — as many as 2 million in the auto industry, according to some estimates.
Not everyone is convinced. If anything, some traditional automotive jobs, both at the factory level, as well as in auto dealerships and service stations, could be at risk. Ironically, that could help enhance the appeal of battery power by simplifying the manufacturing process and sharply reducing the need for vehicle service.
“In general about a third less time and about a third fewer people are needed to build an EV compared to an internal combustion vehicle,” said Sam Abuelsamid, the principal automotive analyst with Guidehouse Insights.
Bolstering EV production
Currently, battery-based vehicles — including hybrids — account for barely 5% of U.S. new car demand. Pure battery-electric vehicles like the Tesla Model Y and Ford Mustang Mach-E make up just 2% of the market. But demand has doubled for BEVs during the past three years and is expected to accelerate as even more new models come to market over the course of the coming decade.
To further enhance the appeal, the Biden American Jobs Plan calls for $174 billion to be directly invested in promoting battery-cars. Among the key steps:
- The installation of 500,000 charging stations across the country by 2030. Along with the longer range of the latest BEVs, that should eliminate range anxiety;
- Financial support, including tax credits, to not only boost production of BEVs but bring some back from overseas;
- The plan calls for “a modification to the EV tax credit” currently in place. First, it would change the current cap that cuts off these buyer incentives once a manufacturer sells 200,000 qualifying vehicles. That has hurt early adaptors like Tesla and General Motors;
- The administration also wants to switch from tax credits to immediate incentives at the point of sale.
“This is a down payment on the future of transportation,” said Joel Levin, executive director of EV advocacy group Plug In America.
The question is whether building more BEVs will offset the potential impact on the manufacturing process.
Impact of building an electric vehicle
A study by AlixPartners found it takes about 9.2 man hours to assemble a plug-in hybrid with both gas engine and electric drive, up from 6.2 man hours for the typical gas-powered model. But pure battery-electric vehicles reduce the figure to just 3.7 man hours.
“That’s just the physics when you have less parts to put together,” said Mark Wakefield, head of AlixPartner’s automotive practice.
It’s not just at the plant where jobs may be lost, however.
“EVs typically require less maintenance than conventional vehicles because there are fewer fluids, such as engine oil, that require regular maintenance. Brake wear is significantly reduced due to regenerative braking. There are far fewer moving parts relative to a conventional gasoline engine,” the U.S. Department of Energy notes in its Alternative Fuels Data Center.
That’s good news for EV owners, bad for dealer service centers and independent repair shops.
So, where does the forecast for millions of new automotive jobs come from? Among other things, the plan the president announced puts an emphasis on American-made EVs, the initial documentation suggesting that new incentives would specifically focus on those that come from U.S. plants. That could sharply reduce the country’s dependence upon not only foreign-made vehicles but also their underlying components.
Battery production issues
There is a widespread concern that if the U.S. continues to lag behind Europe and China in terms of EV sales it also will lose out in terms of battery production. If BEVs eventually replace vehicles with internal combustion engines, dozens of factories — like the new GM Ultium battery plant in Ohio — will be needed, said Abuelsamid.
Currently, the U.S. has capacity to produce 40 gigawatt-hours of batteries annually — including the country’s largest plant, the Tesla Gigafactory in Reno, Nevada. Were all vehicles produced battery-electric, the country would need 1.1 terawatts of batteries each year, requiring dozens more factories. The GM plant going into Lordstown will create 1,100 new jobs.
“While direct manufacturing jobs are likely to decrease, there will be new jobs in everything from installing and maintaining EV chargers to the equipment needed for battery production,” said Abuelsamid.
There also will be a need for more workers to mine and refine lithium and other raw materials needed for EVs, and the energy sector will have to expand to supply power for charging all those batteries, whether from renewable or conventional plants.
While it generally supports the Biden infrastructure plan, the United Auto Workers union warns the program will have to executed carefully. “Workers will disproportionately suffer if we do not make the transition to a green economy in the right way,” said UAW President Rory Gamble.
Even if the administration’s job forecast is overly optimistic, however, analyst Wakefield warns that it would be a mistake to “stop the EV train in the U.S. If we do,” he added, “we will fall behind places like Europe and China” and lose even more jobs going forward.
