Daimler Plans 10,000 Layoffs Amid Auto Industry’s Electric Vehicle Pivot

German Chancellor Angela Merkel stands next to a battery powered Mercedes Vision EQS car at the International Auto Show in September.
Daimler became the latest carmaker Friday to announce cost-cutting measures⁠—in the form of 10,000 layoffs by 2022⁠—to help fund production of electric vehicles, in what the company called “the biggest transformation in history” for the automotive industry. 
  • Daimler, which owns Mercedes-Benz, said it aims to reduce its workforce of over 300,000 by 3% (and cut 10% of management positions), saving 1.4 billion euros ($1.54 billion) by 2022.
  • The job cuts will be made “as socially responsible as possible,” said Wilfried Porth, a labor management board member for Daimler, in an emailed statement to Forbes.
  • The shift toward electric vehicle production⁠—fueled by a demand for more environmentally friendly cars⁠—is also driven by slowing global sales, according to Reuters
  • Audi, Volkswagen’s luxury car unit, said Wednesday that it’s cutting 9,500 jobs⁠—or 1 in 10 of its staff⁠—by 2025 as it moves into electric cars.
  • And BMW said Wednesday that it had reached an agreement with employees to reduce bonuses and other pay perks to fund its electric car push.
  • Continental and Osram, two German car parts suppliers, have also announced layoffs and other cost-cutting measures in the past two weeks.
Chief critic: The VDA, Germany’s auto lobby, which represents Daimler, BMW and Volkswagen, among others. The organization said Daimler’s job cuts would “restrict entrepreneurial activity,” after previously warning that 70,000 industry jobs were at risk.
Big number: 5.1 million. That’s how many electric vehicles are on the road in the world as of last year, according to the International Energy Agency (IEA). The IEA also said that 2018’s electric car sales doubled compared with 2017.
Key background: Daimler said in November it expected to post lower profits over the next two years due to Brexit, tariffs and the struggle to produce enough electric vehicles to meet the European Union’s legally mandated standards. If Daimler fails to make enough of the vehicles by 2021, the EU could fine the carmaker over one billion euros. And, despite pressure to reduce global emissions, only 1% of the one billion vehicles on the road are electric. Tesla, Nissan and two Chinese carmakers, Beijing Electric Vehicle and BYD, are the world’s top electric vehicle manufacturers.

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