Just transition with electric vehicles after the pandemic in the German automotive industry

Following financial and economic crises across the world at the turn of the century, the UN system of international relations reconfigured sustainability with ‘just transition’, which combines its social, environmental and economic aspects. Highlighting distribution of burdens of introducing environmental regulation and emission reduction technologies/products, the notion of just transition refers to protecting workers and their communities. It is used mostly in the context of mining (coal) and construction (building materials and energy efficiency) industries. Using Germany as a case study, the objective of this paper is to investigate the just transition trajectories in a manufacturing industry – automotive. It analyses changing configuration of supply chains in automotive industry with electric vehicles (EVs), and examines the extent to which the proliferation of EV production matches the idea of a just transition to a low carbon economy.

 

In addition to more than three million jobs generated directly by vehicle manufacturing, around ten million people work in the automotive industry only in Europe. Considering the global automotive industry, these figures reach to eight and 50 million, respectively. Once regarded as ‘the industry of industries’, emphasising its pertinence to economic development and industrialisation, automotive manufacturing is now being subject to a major transformation to reduce its greenhouse gas emissions. Due to high levels of dependence on extraction of natural resources and raw materials in the production, maintenance and, most of all, running of vehicles, the transformation of the automotive industry is crucial for mitigating and reducing greenhouse gas emissions, thus for the transition to a low carbon transport sector. International organisations and European governments have recently announced plans on phasing out passenger cars with internal combustion engine and promoting EVs.

 

This has significant and differentiated implications for carmakers and their suppliers, and is likely to alter the organisation of automotive production networks. Introducing EVs has also broad implications for workers throughout the world. It not only changes conditions for the autoworkers at design and research centres, engine factories or car assembly plants in the Global North and developing countries; but also opens up new ways to extract natural resources and process and recycle raw materials in the Global South, with potentially varying levels of environmental impacts and working conditions in, among others, battery production and rare earth material processing.

 

In the first part of this paper, based on the analysis of the policy documents and secondary resources, I highlight achievements and limits of the just transition debate in addressing the multi-faceted and multi-scalar dynamics of transition to a low carbon economy. In the second part of the paper, I look at the implications of just transition to a low carbon economy for the German automotive industry. Big OEMs and first tier suppliers are in the midst of experiencing substantial changes with the shift towards EVs. Especially following the VW emission scandal in 2015, German OEMs and their suppliers, as well as the major multinational energy and fossil fuel companies, promote EVs as the key solution to transport emissions. I also look at how company management and works councils reacted to the supply chains developments during the initial phase of the pandemic in 2020.

 

Even though supported by many stakeholders and having overcome the traditional jobs vs environment dilemma, just transition debate fails to account for all stakeholders and to correspond to new dynamics and tensions, such as COVID-19, in the global economy. Thus, the concept of just transition should be improved conceptually, strategically and institutionally. It should include as many stakeholders as possible - social and environmental movements and workers all around the world, who, especially during/following the pandemic recently, have been trying to have their voices heard. What follows is thus a brief evaluation of the impact of the pandemic on historical and institutional development of global environmental politics, as well as on the German automotive industry supply chains after EVs.

 

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