Projections from the Fraunhofer Institute for Business and Organization, commissioned by the industry association Gesamtmetall and reported by Politico, indicate that the European automotive sector faces a massive decline in employment. Based on their calculations, up to 726,000 jobs could be lost in production by the year 2040.
The institute’s research examines all stages of the value chains involved in manufacturing parts for vehicle propulsion. In the reference year of 2025, this branch of the industry employed approximately 1.6 million people across Europe and generated around 250 billion euros in value creation. According to the Fraunhofer study, job losses are anticipated to reach 375,000 positions by 2030, rising further to 660,000 jobs lost across Europe by 2035.
Fraunhofer modeled the impacts of four different political scenarios on both value creation and employment. The authors found that the most severe job losses would occur under scenarios involving either maintaining the outright ban on internal combustion engines starting in 2035 or adopting the compromise proposal put forward by the European Commission. This compromise model suggests a 90% reduction in CO2 emissions instead of a strict ban, allowing manufacturers to offset requirements through green steel or renewable fuels. Despite these policy differences, Fraunhofer found no variation in the labor market outcomes across the various scenarios.
In conclusion, the study asserts that without strategic interventions, Europe risks becoming permanently dependent on third countries for critical technologies. The researchers emphasize that all scenarios predict a significant contraction in European value creation by 2035. They further note that establishing a broad technological foundation could help sustain current levels of production and mitigate the loss of value creation and employment.
