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There are a lot of cliche comments here about Dieselgate and German manufacturers vs Tesla. The threat isn’t Tesla, Tesla will do very well but isn’t going to t

There are a lot of cliche comments here about Dieselgate and German manufacturers vs Tesla. The threat isn’t Tesla, Tesla will do very well but isn’t going to take over the world, it’s that manufacturing EVs doesn’t need a lot of the established supply chain, and doesn’t need the same level of employment. Mercedes, VW, BMW etc will be fine, but a lot of their specialised suppliers will go bust, and a lot of jobs will be lost.

esjeon 7y ago
My guess is that, as more companies hop on the EV train, they will spend more on interior features, like better onboard computer, seats, default options, etc. I also believe that the price of car will remain similar even after complete transition to EV, because the real factor here is purchasing power, not production cost. If these turn out to be true, not so many people will lose job, but most will have to change their profession.
- bnt 7y ago
  Saying that a metal worker can easily switch to a leather craftsman sounds a bit simplistic, no? Many jobs will be lost, new ones will be created in their place, some people will switch careers, others will be left unemployable. A lot of German (and EU) education machinery focuses on the current gen car industry, and that’s not sustainable in the long run. So they will have to reinvent their educational system as well.
  - jacquesm 7y ago
    Those metal worker jobs were long ago lost to automation. At that level very few - if any - parts on a vehicle are made by a person, the biggest job is to load blanks and to unload parts into machinery.
weinzierl 7y ago
I agree with everything you wrote and while I also believe that "a lot of their specialised suppliers will go bust" I think that at the same time there are big opportunities for the suppliers and some will prosper. The reason is that I believe electronics and software will become ever more important. Traditionally the German manufacturers have outsourced anything to do with software and even most of the electronics. They have no internal knowledge about software what so ever - every bit of software know-how is at the suppliers. That's why I think that at least some of the suppliers will be better off in the future than the manufacturers themselves. And it is also a question of human resources. In the past and for a long time software developers at German car manufacturers have been looked down on by all the "real engineers" who are in charge. As a software dev you have been much better off at a supplier. This is changing but in my opinion it gives the suppliers a good head start on capable staff for software projects.
- ChuckNorris89 7y ago
  This. German auto makers are now just huge armies of managers and consultants since they outsourced most tech/software R&D to suppliers (Bosch, Continental, etc.) to reduce costs by having the suppliers take the financial risks associated with R&D. Outsourcing R&D was a typical MBA move since it meant they could keep a lot more money in their pockets and have the suppliers bid each other to the ground on price, however, this now means the suppliers have most of the cutting edge tech now and are free to sell it to other lower tier manufacturers which in the past had no resources for advanced tech. So now you can have a Hyundai with the same tech as a Merc since they all have the same Bosch/Continental ECUs with some minor tweaks meaning the main selling point of the luxury brands is now the design, badge and perceived brand value rather than any proprietary tech. This is what drove the major suppliers to halt R&D investments in Germany and expand massively in Eastern Europe in a quest to bring costs down and increase their success in the bids for future contracts.

esjeon 7y ago

My guess is that, as more companies hop on the EV train, they will spend more on interior features, like better onboard computer, seats, default options, etc. I also believe that the price of car will remain similar even after complete transition to EV, because the real factor here is purchasing power, not production cost. If these turn out to be true, not so many people will lose job, but most will have to change their profession.

bnt 7y ago
Saying that a metal worker can easily switch to a leather craftsman sounds a bit simplistic, no? Many jobs will be lost, new ones will be created in their place, some people will switch careers, others will be left unemployable. A lot of German (and EU) education machinery focuses on the current gen car industry, and that’s not sustainable in the long run. So they will have to reinvent their educational system as well.
- jacquesm 7y ago
  Those metal worker jobs were long ago lost to automation. At that level very few - if any - parts on a vehicle are made by a person, the biggest job is to load blanks and to unload parts into machinery.

weinzierl 7y ago

I agree with everything you wrote and while I also believe that "a lot of their specialised suppliers will go bust" I think that at the same time there are big opportunities for the suppliers and some will prosper. The reason is that I believe electronics and software will become ever more important. Traditionally the German manufacturers have outsourced anything to do with software and even most of the electronics. They have no internal knowledge about software what so ever - every bit of software know-how is at the suppliers. That's why I think that at least some of the suppliers will be better off in the future than the manufacturers themselves. And it is also a question of human resources. In the past and for a long time software developers at German car manufacturers have been looked down on by all the "real engineers" who are in charge. As a software dev you have been much better off at a supplier. This is changing but in my opinion it gives the suppliers a good head start on capable staff for software projects.

ChuckNorris89 7y ago
This. German auto makers are now just huge armies of managers and consultants since they outsourced most tech/software R&D to suppliers (Bosch, Continental, etc.) to reduce costs by having the suppliers take the financial risks associated with R&D. Outsourcing R&D was a typical MBA move since it meant they could keep a lot more money in their pockets and have the suppliers bid each other to the ground on price, however, this now means the suppliers have most of the cutting edge tech now and are free to sell it to other lower tier manufacturers which in the past had no resources for advanced tech. So now you can have a Hyundai with the same tech as a Merc since they all have the same Bosch/Continental ECUs with some minor tweaks meaning the main selling point of the luxury brands is now the design, badge and perceived brand value rather than any proprietary tech. This is what drove the major suppliers to halt R&D investments in Germany and expand massively in Eastern Europe in a quest to bring costs down and increase their success in the bids for future contracts.