Automotive industry shifting from Europe to the USA. Why’s that?

Both high energy prices and a high number of bureaucratic hurdles in Europe are heavily impacting the automotive industry. Hence, the United States is investing heavily in promoting electromobility, offering high subsidies for its expansion.

Klaus Rosenfeld, the CEO of Schaeffler – a major German provider to the automotive sector housing over 80,000 personnel globally – has announced that they have no plans to transfer current production to the United States. Nevertheless, it is more likely that companies will build the next factories in America. There is a chance that Europe will lose from that redistribution.

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

On September 13, 2022, President Biden unveiled the Inflation Reduction Act, providing significant subsidies to manufacturers of environmentally conscious 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 should 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. Furthermore, the competitive advantage that German manufacturers and component suppliers held, primarily due to their proficiency in internal combustion engines, is steadily declining.