We're always being told by the Joe Bidens and Boris Johnsons of this world about the tremendous employment opportunities that will be created by the new green economy, claims that normally focus on new jobs rather than (unsurprisingly) jobs lost. When I hear those claims, I often find myself wondering what the net picture will be.
Nevertheless, surely we can assume that electric vehicles will be central to the jobs bonanza that will be coming a greening West's way.
Well, maybe not.
The Financial Times:
The opening of Tesla's Shanghai factory in 2019 was a breakthrough for electric vehicles and for overseas carmakers: it was the first wholly foreign-owned plant in the world's largest car market. But it also marked the start of an even bigger trend, which promises to upend the structure of global manufacturing, bring a new wave of deindustrialisation to Europe and trigger trade tensions of an intensity to match the 1980s. That trend is the emergence of China as a car exporter.
As Gregor Sebastian and François Chimits of the Mercator Institute for China Studies documented recently, China's car exports are taking off, many of them are electric vehicles and most are going to Europe. From almost nothing a few years ago, China exported half a million electric vehicles in 2021, and its market share in Europe was second only to Germany's. As the car market goes electric, Europe could quickly find itself running a trade deficit with China in automobiles…
If batteries replace combustion engines, and China dominates car production, the disruption will be immense. Automobile manufacture underpins the prosperity of Europe and Japan. Companies such as Toyota and Volkswagen, plus their supply chains, employ millions of people in stable, skilled manufacturing jobs. They underpin national current account surpluses. A shift in the location of car manufacturing would have an even greater impact than the past migrations of steel, electronics or shipbuilding…
For Japanese and European carmakers, the challenge is that while electric vehicles may be high-tech, they are not complex. Internal combustion engines were at the heart of 20th-century industrial prowess. A vehicle built around one is a complex assembly of crankshaft, pistons, fuel pumps, turbochargers and myriad other components, each of which must be mastered and integrated. Even after 150 years of development it is still a difficult task, calling for deep technical expertise and a vast network of suppliers, rather than access to the lowest possible labour costs.
The drive train of an electric vehicle, by comparison, is extraordinarily simple: a battery, a motor and not much else. Production of the crucial component, the battery, is a business of huge scale and thin margins; the economics are similar to another green technology, the solar panel. Assembly of electric vehicles needs some of the skills of traditional carmaking, but bears comparison as well to other electrical goods. Solar panels and consumer electronics are industries where Chinese manufacturing dominates on cost.
If things carry on as they seem to be, the EU faces the hollowing out of its automotive sector (a hollowing out that will also do serious damage to the sector's suppliers), something that will not take place without major political, social, and economic consequences, including, perhaps most notably, in Germany. Angela Merkel's legacy just keeps giving.
It's perhaps symbolic of the shambles that the central planners running Western climate policy have created that the EU simultaneously subsidizes purchases by European consumers of Chinese-made EVS, while also imposing a 10 percent tariff on those same vehicles.
The U.S. tariff is higher (27.5 percent), but after reading Joel Kotkin's latest for Capital Matters, it doesn't seem that Americans should be too relaxed.
Here's an extract:
As states such as California seek to ban gas-powered cars, something the Biden administration has also proposed, we could be undermining our own transport sector, ceding a large part of our economy into the hands of China.
The ever-quickening pace of mandates for electric cars, with little in the way of new electric capacity, seems likely to serve Chinese interests more than ours. Beijing maintains almost total domination of the solar-panel industry – its battery capacity is now roughly four times ours, a gap projected to expand by 2030. They also have effective control of the requisite rare-earth minerals and the technology for processing them.
Indeed, given China's growing dominance in computer production (and its drive to control semiconductors as well), the future of American automobile production could very well consist of slapping a Chinese computer to a Chinese battery with some bent metal, arguably also sourced there, around it . . .
A green jobs bonanza, I tell you, a bonanza . . .
Will the West's electric-vehicle push just be another policy that ends up benefitting China?
Andrew Stuttaford is the editor of National Review's Capital Matters.