Electric car focus risks handing jobs to China, EU auto suppliers warn

FRANKFURT (Reuters) - A fixation on electric cars risks damaging Europe’s auto supplies industry and handing jobs to China, the region’s car parts manufacturers warned at the Frankfurt motor show.

Suppliers, which say they provide around 5 million European jobs, want carmakers and politicians to look at other ways of cutting vehicle emissions too, such as more efficient combustion engines and synthetic fuels.

Roberto Vavassori, president of European Association of Automotive Suppliers (CLEPA) warned a headlong rush to electric cars would hand business to China, which along with South Korea and Japan dominate battery production for such vehicles.

“We need to provide a sensible transition period that doesn’t give unwanted gifts to our Chinese friends,” he said, estimating European automakers were paying 4,000-7,000 euros ($5,000-8,000) to China for batteries for every electric car produced in Europe.

Following Volkswagen’s (VOWG_p.DE) diesel emissions scandal and big improvements in battery technology, many European carmakers are investing heavily in electric vehicles.

They are being encouraged by several governments, with Britain and France both recently announcing plans to eventually phase out combustion engines to try to cut pollution.

Daimler and Volkswagen (VW) both announced plans on the eve of the Frankfurt show to accelerate their shift to electric cars. On Wednesday the EU car industry lobby offered to further cut CO2 emissions, albeit over a lengthy period and dependent on uptake of electric cars.

The manufacturers also, however, pointed to huge disruptions for both themselves and the supply chain.

Daimler, for example, said it was seeking billions in savings to help fund the transition, while VW said it would tender for partners to provide battery cells and related technology worth more than 50 billion euros.

‘EUROPE AT RISK’

With European investment in battery technology lagging far behind China, many EU suppliers want the car industry to keep its options open - even those also embracing electric vehicles.

“The problem is the one-dimensional nature of the debate,” said Volkmar Denner, chief executive of Germany’s Robert Bosch GmbH, the world’s biggest auto supplier.

He said Bosch was optimizing the combustion engine and also exploring synthetic fuels, which would have the advantage of being able to use existing filling stations and engines.

“This is a faster way of limiting global warming,” he said. “We are doing this alongside electric vehicles.”

The stakes are high, with the auto industry as a whole providing around 12.6 million jobs in the European Union, or about 5.7 percent of the total.

Germany, home to some of the biggest industry players, has sounded much less enthusiastic about ditching the combustion engine. Chancellor Angela Merkel, campaigning ahead of Sept. 24 elections, has said she is “no friend of bans” and the car industry will need support in its transformation.

Trade unions are pressing hard for jobs to be protected, from suppliers to manufacturers.

“Self-contained value chains are a central pillar of our industrial model and play a big role in the success of the German economy,” Joerg Hofmann, president of the IG Metall union, told steel and car industry members on Wednesday.

CLEPA’s Vavassori said Europe was lagging behind in the production of sensors and microchips, as well as batteries, and there was a risk in relying on Chinese supplies given geopolitical instability.

“We need production in Europe for vehicles of future, or we put all Europe at risk,” he said.