The transformation to electrified transportation is well underway. We’ve seen significant market share increases, corporate investments, and administrative policies supporting the move to electric vehicles. However, challenges still linger regarding how and when the transition to all forms of battery electric and hybrid vehicles (xEVs) will occur and the impact on automotive jobs and the Midwest regional economy.
By May 2021, the xEV market—including HEVs, PHEVs, BEVs, and FCEVs—continued to increase its market share of total light-vehicle sales in the United States, up to roughly 8 percent. Compared to May 2020, xEV sales have increased by over 156 percent year-over-year, showing tremendous growth. Several factors support increased xEV sales, including seeing an uptick in consumers choosing electric vehicles—and not just to save money at the pump. Also aiding in this technology’s growth are companies’ model offerings. We are seeing more automakers provide electric-only options, such as the Tesla Model S (pure electric) and the Toyota Sienna (hybrid). Forecasters anticipate the number of xEV nameplates to increase from 65 models in 2020 to over 200 by 2025. Although we will see several xEV models in various segments, the volumes anticipated for each of these vehicle platforms remain low in the mid-term—expecting just over 4,000 units, on average, by 2025.
Although xEVs sales have grown, many challenges remain. Some factors regarding the uncertainty of the timing of this transition include customer acceptance, battery performance and cost, availability of charging infrastructure, availability of products and batteries, and government policies and incentives.
Many work in the production, sale, and support of vehicles in the automotive industry. As the industry continues to advance xEV technology, there are many concerns on how workers will be affected. As of April 2021, motor vehicle and parts employment in the United States was over 715,000. Industry employment has started to grow since the COVID-19 pandemic after experiencing an initial sharp drop in employment. Since April 2020, the U.S. has seen significant improvement in employment numbers, but employment has not yet returned to pre-pandemic levels.
While traditional internal combustion engine (ICE) vehicles continue to constitute most of the U.S. auto industry’s output, a growing share of automotive employees work in xEV technology. The industry will likely create new jobs for manufacturing component parts such as batteries, electric motors, and power electronics while building out a much-needed EV charging infrastructure.
However, due to fewer parts and lower mechanical complexities in xEV propulsion systems, it is likely that employment in producing powertrains, exhaust, and conventional ICE fuel systems will fall. For example, Ford announced that the simplification of xEV assembly could lead to a 50 percent reduction in capital investment and requires 30 percent fewer labor hours than traditional ICE manufacturing (Ford Motor Co., 2017).
As the industry continues to evolve, the need for continuing education is critical. Workers will need to enhance their existing skill sets with those related to xEV technology. Examples of in-demand skills include data analysis, computer programming, software design, cybersecurity, systems thinking, and knowledge of electric or alternative fuel vehicles.
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