For more than a century, auto makers continually honed their gas and diesel engines, sparring over which had greater power, better fuel efficiency, more durability or delivered a smoother ride. Now, they are sending the combustion engine to the scrap heap and are pouring billions of dollars into electric motors and battery factories. Instead of powertrain specialists, they are hiring thousands of software engineers and battery experts.
The transition is upending the automotive workplace, writes The Wall Street Journal (July 24-25, 2021), from the engineering ranks and supply chain to the factory floor. Parts makers that for generations have made the same pieces for engines and transmissions are jockeying to supply electrical components.
Unions in the U.S. and Europe fear a steep loss of jobs tied to making engines and transmissions. The UAW has warned that the move to EVs, which require fewer parts and 30% less manpower to produce, could jeopardize tens of thousands of U.S. jobs. A Morgan Stanley report estimates full transition to EVs could lead to 3 million lost automotive jobs globally. EVs are simpler mechanically than gas-powered ones. Their drivetrains employ fewer than 20 moving parts, compared with hundreds for the gas-powered version.
“It’s been a fun ride,” said an engineer with 40 years in the industry. “But I think we’re coming into the homestretch for the conventional engine.” Auto executives have concluded that they can’t meet tougher tailpipe-emissions rules globally by continuing to improve gas or diesel engines. And they don’t intend to develop any new gas engines. “I don’t know where to spend money on them anymore,” said GM’s President. Developing a new gas engine can cost $1 billion and involves 100’s of suppliers. Over the past several decades, auto makers rolled out 20-70 new engines annually. That number will fall below 10 this year, and then essentially go to zero.
The industry’s rapid shift in focus has left suppliers that have long made parts for gas engines hustling to reinvent themselves. “We don’t want to be left making the best buggy whips,” said one Michigan auto supplier.
Classroom discussion questions:
- What strategy should auto parts makers take?
- Will the transition to EVs be complete this decade? Why or why not?