Electricity costs move the auto industry to the USA

High energy prices and high bureaucratic hurdles are affecting car manufacturers. They invest more and more in the United States, which promotes the expansion of electromobility with high subsidies.

Klaus Rosenfeld, the head of Schaeffler, the fourth largest German supplier to the automotive industry with more than 80,000 employees worldwide, said that it would not reposition existing production to the US. Nevertheless, it is more likely that the next factories will be built in America. There is a risk that Europe will lose from that redistribution.

That statement echoes a significant trend: the auto industry is increasingly shifting its production from Germany and other parts of Europe to China and North America.

On September 13 last year, US President Biden announced the Inflation Reduction Act, which foresees large subsidies for producing environmentally friendly vehicles.

As a consequence of the emigration plans, and as stated in the current analysis of Berylls, the predicted number of units for the production period 2023-2029 in Europe is quite decreasing. Migrations also generate many more positive prognoses for other regions of the world. Global vehicle production is anticipated to grow shorter than predicted in 2021.

Loss of 100,000 jobs in Germany

As stated by the analysis, there will be a distinction in the production of nearly four million vehicles between Germany and North America in the forthcoming years. Relocations like those recently reported by Audi and Ford would boost that trend. As a result, failures of up to 100,000 directly impacted jobs and a fall in Germany’s gross domestic product (GDP) of 0.6 percentage points in 2029 are expected.

Experts note that it is nearly five percent of GDP here, so the decline will especially affect the German economy. In addition, the competitive edge of German manufacturers and parts suppliers, which was mainly associated with internal combustion engines, is also lowering.