German carmakers, unions urge more government help for electric shift

BERLIN (Reuters) - Germany’s automakers and unions urged the government on Thursday to do more to support the industry’s shift to electric cars, which provide less assembly work than combustion engine vehicles.

FILE PHOTO: Cars drive through the "Sandkamp Gate" to the Volkswagen factory in Wolfsburg, Germany, September 23, 2015. REUTERS/Axel Schmidt/File Photo

State-backed employment schemes should support retraining and short-term working hours should be exempted from social insurance contributions, according a proposal published by German Employers’ Association Gesamtmetall.

An umbrella fund should also be set up to help companies with the cost of the overhaul. Stakeholders would pay into the fund, the proposal said, without giving details.

The plan was discussed at a summit attended by German union IG Metall and car industry bosses in Berlin on Wednesday.

“Even if there is no economic recession or crisis, a coordinated approach between social partners and the state is required to strengthen Germany as an industrial location and to offer employees a perspective,” Gesamtmetall said in a statement.

Electric cars have fewer moving parts than combustion-engined variants, putting around 410,000 German jobs at risk by 2030, according to a study published by Germany’s National Platform for Future Mobility this week.

IG Metall Chief Joerg Hofmann said the government had pledged to treat the issue with urgency.

The government will discuss how to loosen employment rules to facilitate short-term working hours and a decision could be reached by Jan. 29, sources familiar with discussions told Reuters.

The auto industry is struggling to adapt to more stringent anti-pollution rules which were dramatically tightened after Volkswagen VOWG_p.DE admitted in 2015 to systematically cheating exhaust emissions tests.

In September, the European Parliament’s environment committee voted to cut vehicle carbon dioxide emissions by 45% between 2021 and 2030, and pushed for a quota of 20% of electric vehicles by 2025 and 50% by 2030.

Meeting even the previous targets for =2021 is going to be a challenge, consulting firm PA consulting said.

It forecast in a study this week that Europe’s 13 top manufacturers face combined fines of more than 14.5 billion euros ($16.2 billion) from missing 2021 goals.

PA Consulting’s estimates are based on buyer’s choices in 2018. Since then, carmakers have launched a raft of hybrid and electric cars, but a shift away from less CO2-emitting diesel vehicles and the increasing popularity of heavy sport-utility vehicles have made attaining the targets more difficult.

Volkswagen could face a fine of 4.5 billion euros, Fiat Chrysler a 2.46 billion euros penalty, and Peugeot and Daimler fines of 938 million and 997 million respectively, PA Consulting estimated.

Carmakers will need to sell more than 2.5 million electric cars to meet 2021 targets - a 1,280% increase, it added.

Reporting by Holger Hansen in Berlin and Edward Taylor in Frankfurt; Editing by Mark Potter