The switch from combustion to electric vehicles can create new opportunities for the Italian supply chain, with a projection of +6% to 2030 in terms of employment; it is crucial to act in time, planning and supporting the reconversion.
The automotive industry has always played a central role in Italian history, making a fundamental contribution in terms of employment and research, as well as to the development of some regions and the creation of a quality production chain. Over time, globalization, climate challenges and the rise of new technologies for mobility have made the car an increasingly standardized product, contextually leading companies to grow in size to achieve the economies of scale needed to stay competitive.
In this context, Italy’s industrial capacity has decreased, partly offset by the supply chain's increased collaborations with foreign markets. A process that has accelerated further in recent years, with the transition from fossil fuel-based powertrains to more sustainable technologies.
To date, electrification is the most mature technology for reducing the environmental impact of private mobility. With this in mind, Motus-E - an association established to accelerate the switch to e-mobility in Italy - and CAMI (Center for Automotive and Mobility Innovation at Ca' Foscari University of Venice) conducted a study on the path needed for the transition to electric mobility, the results of which were presented in the "Report on the Transformations of the Italian Automotive Ecosystem".
Technological evolution at the heart of the transition
Between 1989 and 2021, car production in Italy decreased by 78 percent, which corresponds to 1.5 million fewer units, while over the 30-year period 1989-2019, vehicle registrations decreased by only 16 percent. Starting in 2020, however, first the impact of Covid, then the semiconductor crisis and the Ukraine war accentuated the drop in domestic demand, which fell a further 25 percent.
The analysis shows that the supply chain has reacted relatively well to the drop in production: the companies that are part of it have implemented a process of internationalization that has reduced their dependence on the domestic market: as of today, more than 50% of the components produced in Italy go abroad.
Over the past century, the automotive supply chain has faced major organizational and technological changes, while keeping its business tied to the combustion vehicle and powertrain. It is precisely the powertrain, however, at the heart of the transformation taking place in recent years: this is why, with an approach coherent with the latter point, the in-depth analysis conducted by CAMI considered not only the 'traditional' supply chain, but the entire mobility ecosystem.
The report published by Motus-E includes 2,400 companies operating in the automotive supply chain, in which 280,000 people work; 199 of the 2,400 companies produce at least one component for the endothermic powertrain, employing a total of 43,000 people; 14,000 of these work in companies whose production is completely tied to ICE vehicles - and are therefore those at higher risk. A further statistic is that, in general, about 40% of the employees most exposed to risk are working in large companies.
Electric powertrain-oriented companies, on the other hand, are 107 and employ a total of 22,000 people. It is also important, thinking ahead, to keep in mind the activities that will be created to serve the new mobility and their potential in terms of employment. In general many manufacturing activities, if developed, could contribute significantly to the number of new employees as well as ensure a stronger supply chain by reducing its dependence on non-EU suppliers. In this context, for example, it is estimated that 4,000 new direct jobs will be created to serve the battery production plants already planned in Italy.
All the data collected from the 2,400 mapped companies have been merged into a dedicated, purpose-built database.
The scenario to 2030
Motus-E and CAMI then outlined the scenario of the mobility ecosystem in Italy with a 2030 horizon. To set the context and ensure consistency and comparability with other studies already published, data from the report "E-mobility: A green boost for European automotive jobs?" by Boston Consulting Group were taken as a reference.
According to those projections, by 2030 total car production in Europe will decline by 4% and sales by 8%, but at the same time the share of 100% electric cars produced in Europe will rise to 59%. Simultaneously, people employed in companies operating exclusively in the field of combustion engines will drop by about 42%, while everyone else - those employed by companies not tied to combustion technologies - will grow by 10%.
Starting from these data, a scenario was developed based on the results extracted from the database of 2,400 companies in the Italian automotive supply chain, integrating assumptions regarding the distribution and risk of employment and the degree of exposure of Italian companies to the European supply chain.
Considering that the number of employees in companies whose production is totally dedicated to the endothermic powertrain is low, it is estimated that the transition to electric mobility can have a positive employment impact in Italy, with an increase of 6%.
The transition to e-mobility represents an opportunity, which some European countries are already seizing and on which Italy must accelerate. How? By attracting new supply chains, supporting conversion and facilitating the adoption of new technologies.
The report also highlights how the companies considered can be divided into two groups, according to the type of impact they will face - technological, as in the case of a company whose production includes components for ICE vehicles that will have to face the transition to new technologies; or competitive, related to market demand and competition from foreign competitors.
Preparing for the future
How to mitigate the possible impact of the transition? Companies exposed to a technological impact will have to undergo a comprehensive analysis in order to plan a reconversion. On the other hand, companies that are already operating in the electric vehicle supply chain will have to react to changes in market dynamics, which is why it is important to create the necessary conditions to make them competitive in the European context by supporting their development.
Considering the projections contained in the BCG report, which include an EVs share of more than 50% for both sales and production in Europe in 2030, Motus-E stresses how it is already crucial to set the conditions that will allow Italian companies to meet the demand that this technological change will bring. In addition to the supply chain serving manufacturers, it is also important to consider the specificities that will have after-sales services such as maintenance, end-of-life battery management and recycling.
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