Carmakers Spell Out the Economic Realities of EVs

Carmakers are rushing to launch sweeping plans to electrify their fleets—and pointing out the economic downside of doing so.

The stampede to electrification has been triggered by the announcement of outright bans of piston-powered cars by 2040 or earlier by China, France and the U.K.

Earlier this week CEO Dieter Zetsche warned that the cost of developing and launching Daimler AG’s first wave of electric cars will make them half as profitable as the models they replace. That will mean hefty cost-cutting measures and perhaps more outsourcing of powertrain components, both of which portend Daimler job cuts.

Volkswagen AG says its plan to electrify its entire product lineup by 2025 will include €50 billion ($60 billion) in spending to buy such components as batteries from outside sources rather than making its own engines.

PSA Group Carlos Tavares made a similar point today at the Frankfurt auto show. He says government mandated shifts to EVs will jeopardize 800 engine testing jobs at the company’s recently acquired Opel facility in Germany.

If governments decide to ban piston engines, Tavares tells reporters, “my role as the president of the company is to comply,” which will include restructuring the company to adapt to an EV-based reality.