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What happened when a German car factory went all electric?| GuyWhoKnowsThings


Zwickau, a city in eastern Germany, may not be as famous as Detroit, but its economy has revolved around internal combustion engines since August Horch established Audi here in the early 20th century.

So when Volkswagen announced in 2018 that it would convert its Zwickau factory, the area's largest private employer, to make only electric vehicles, it was a big deal.

“A lot of people were skeptical,” said Michael Fuchs, who has worked at the factory for more than a quarter of a century. They asked themselves: “What is going to happen?” he said.

Volkswagen closed assembly lines for its popular Golf hatchback models and converted the factory, which has its own highway exit, to make six electric models. The remodeled plant can produce one car per minute and ship it by train.

It was a rare case in which a major automobile plant switched completely from internal combustion to battery power, making Zwickau a case study for a Big question facing the automotive industry.

Electric vehicles have far fewer parts than gasoline vehicles: They don't have radiators, exhaust pipes, fuel tanks, fan belts, or complicated gearboxes. As a result, many auto workers, executives, and politicians have hypothesized that such automobiles would require fewer workers, leading to mass unemployment in industrial towns and cities around the world.

Zwickau, where more than 10,000 people work for Volkswagen and tens of thousands more for suppliers, appears to have avoided those dire consequences. Employment has not plummeted and suppliers of parts for combustion vehicles have not been forced to declare bankruptcy en masse. Their experience offers some hopeful lessons for other places that depend on the auto industry.

However, the people of Zwickau, with its immaculate but peaceful centre, are still uneasy.

While Zwickau's experience suggests that converting to electric vehicles will not alone lead to economic misery, it and other new technologies are shaking up the industry in ways that could still be very painful for established companies and their workers.

A big change already visible in Germany and the rest of Europe is the rapid growth of young Chinese electric car manufacturers such as BYD and SAICthat are increasingly driving customers away from established rivals such as Volkswagen, the world's second-largest automaker after Toyota.

“The question is: how much will it change mobility in general?” said Thomas Knabel, who heads the Zwickau local of IG Metall, the union representing Volkswagen workers. “In the future, will Volkswagen still be present?”

The best-selling electric car in Europe is Tesla's Model Y sport utility vehicle, built in a factory about 145 miles north of Zwickau, near Berlin. Last year, Volkswagen sold less than half of its equivalent SUV, the ID.4, according to Schmidt Automotive Research.

Disappointing sales have led Volkswagen to cut shifts at one of its two assembly lines in Zwickau, where the company makes the ID.4, the ID.5, two Audi models and two small electric cars. The decision illustrated the downsides of going all-in on electric vehicles. Other established automakers have hedged their bets, produce electric vehicles and fuel-burning cars in the same factoriesallowing them to adapt to sales fluctuations.

“It's a much more ambitious project than anything I know of in North America,” said Ian Greer, a research professor at Cornell University who has studied the region around Zwickau. “VW has taken a much bigger risk.”

With the factory running below capacity, some people in Zwickau are wondering whether Volkswagen's electric vehicles are attractive enough.

Max Jankowsky, president of the regional Chamber of Commerce, said he was disappointed not to have seen any Volkswagens during a recent trip to Dubai. “It was just Teslas, Teslas, Teslas,” said Jankowsky, who is also president of a company that makes cast iron parts for suppliers to Volkswagen and other manufacturers.

Volkswagen executives say they expect sales to rebound this year as it begins selling new models, including a pickup truck and a pickup truck, targeting market segments where Tesla does not participate.

“We are aware of our current challenges and are addressing them rigorously,” Oliver Blume, Volkswagen's chief executive, said in a statement last month.

At least in the short term, the damage to the local economy caused by the Zwickau factory conversion was surprisingly slight, say local officials, business leaders and worker representatives.

Increased demand for workers to make electronic components largely offset job losses on production lines making parts for combustion cars, according to a study by AMZ Saxony, a supplier group.

“Overall,” said Dirk Vogel, AMZ's chief executive, “not much happened.”

Volkswagen, companies and local officials coordinated an effort to prepare workers and businesses, mitigating the impact.

The automaker expanded its training institute in Zwickau to teach its employees electric vehicle technology. To generate enthusiasm, Volkswagen allowed workers to borrow battery-powered cars for a few days. The West Saxon University of Applied Sciences in Zwickau, a state university that already had a strong focus on the automotive industry, expanded courses related to electric vehicle technology.

Suppliers developed new components for electric vehicles to replace products in danger of becoming obsolete. Eberspächer, a German supplier with a factory 60 miles east of Zwickau, near Dresden, began offering climate control systems for electric vehicles in addition to emissions systems for conventional cars.

Some suppliers have suffered. GKN Driveline, which makes driveshafts not needed in most electric cars, is closing a factory in Zwickau and moving production to Hungary. But GKN was not supplying Volkswagen and the closure appears to be a reaction to broader trends in the industry and German labor costs. GKN did not respond to requests for comment.

New technologies have also created jobs, including 175 at FDTech, based in the nearby city of Chemnitz. The company, partially owned by Volkswagen, is one of five companies in the area developing autonomous driving technology.

Zwickau enjoys unique luck. Many local suppliers make seats, dashboards, painting equipment or other products that electric vehicles need as much as gasoline vehicles.

Due to a shortage of electricians, engineers and other skilled workers, the unemployment rate in the state of Saxony, which includes Zwickau, has increased only modestly. It was 6.6 percent in March amid a general economic slowdown, up from 6.3 percent a year earlier.

“There will be suppliers that will disappear,” said Karsten Schulze, CEO of FDTech. “But skilled workers will immediately be sought elsewhere.”

Volkswagen workers had some control because German law requires that they be consulted about changes affecting working conditions. The IG Metall union obtained a promise from the company not to lay off any full-time employees in Zwickau until 2030 at the earliest. However, the guarantee does not apply to temporary workers and the company laid off 270 of them after their contracts expired.

In the United States, unions are relatively strong in the Midwest and East, but most automobile factories in the South are not unionized. He United Automobile Workers is trying to change that. But even if the union is successful, American companies will have no obligation to consult workers about changes that will affect their jobs, or to train them for new jobs. And there is no guarantee that new jobs in battery manufacturing, for example, will be as high-paying as jobs in factories where cars are assembled.

Residents note with pride that Zwickau has survived many upheavals. After Germany's defeat in World War II, Soviet occupiers confiscated Audi's manufacturing equipment. The car manufacturer moved to Bavaria and was later acquired by Volkswagen.

The communist government ruling East Germany converted the Zwickau factory to produce simple Trabant vehicles. The cars spewed blue exhaust gases and had a body made of plastic due to a shortage of steel. They could not compete with Western cars after the reunification of Germany in 1991. Thousands of Trabant workers lost their jobs. In the late 1990s, unemployment in the region exceeded 20 percent.

Volkswagen acquired the Zwickau factory after reunification and gradually expanded it to become one of the company's largest production centers. The conversion to electric cars was so momentous that Angela Merkel, the German chancellor at the time, attended a ribbon-cutting ceremony in 2019 when the first battery-powered model rolled off the assembly line.

Not everyone in Zwickau is a fan of electric cars. The far-right Alternative for Germany party, which holds 11 of the 48 seats on Zwickau City Council, has complained that Germans are being forced to buy electric vehicles, echoing comments by former President Donald J. Trump and others. republicans.

The national government, led by Chancellor Olaf Scholz, a Social Democrat, angered many in Zwickau when it abruptly cut subsidies for electric vehicles last year to deal with a budget crisis. Sales of electric vehicles in Germany fell 14 percent during the first three months of the year, although they still represented 12 percent of new cars.

Still, few people in Zwickau are pushing for Volkswagen to make gasoline cars again.

“With the transition to a new technology, the question is always: are you the first or the last?” said Constance Arndt, mayor of Zwickau. “I think it's always better to be first.”


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