Britain - the long drive to EVs: car giants' giant money-spinner

Spring 2021

Before the pandemic, analysts were already touting 2020 as the year of the electric car”. It certainly seems to be turning out that way: apparently Britain has just overtaken France to become Europe’s second largest electric car market with 31,800 electric cars sold in the first quarter of the year, compared with 30,500 in France. 

    Although the pandemic shut down car plants across the world for part of the year (only a month in some places, longer in others) and the global car market shrank by 20%, global sales of electric vehicles (EVs) increased by 43% in 2020! That said, EVs still make up just 4.2% of total sales. 

    In fact Reuters estimated in 2019 that car manufacturers were going to invest around £200 billion in EVs over the next 10 years. Just one year earlier, future spending on EVs was estimated to be only £65bn. So the market is expanding way beyond expectations. 

    No wonder. Once the ball gets rolling, competition forces every manufacturer to adapt or lose out. 

    By now, most car manufacturers seem committed to making electric cars. Of course, they virtuously claim this is to cut carbon emissions in the fight against climate change. Nothing to do with the incentives and subsidies offered by governments or the high prices they can charge! And neither are governments being particularly virtuous: they are merely courting the green vote. 

    So in Britain, all new conventional petrol and diesel cars and vans are to be banned from sale in 2030. New hybrids will be given a stay of execution until 2035, on condition that they are capable of covering a “significant distance” in zero-emission mode - a term which the Government has yet to define. 

    At the beginning of 2021, a number of car manufacturers with plants in Britain announced plans to become “all-electric”. For instance, Jaguar Land Rover said that it would be all-electric by 2036. Ford Europe announced that all its passenger vehicles would be electric by 2030. 

    These announcements could put into question both companies’ operations in Britain. The Ford engine plant in Dagenham makes only diesel engines, some of which go into the Transit van, built in Turkey and which might have a life beyond 2030, but nothing is certain. 

    The emergence of electric cars, the long-drawn out Brexit saga and the 2008 crisis, have all intensified rivalry between the car companies for a shrinking market. The car bosses will try to maintain - and increase - their profits in whichever way possible. If EVs are going to be one way to do it, so be it. And as usual, car workers will be expected to pay with their jobs and cuts in their conditions. 

Britain’s car industry reflects the rest

Today Britain’s car industry is totally dominated by international car companies. This wasn’t always the case. In the very “old days”, just after WW2, Britain had its “own” domestic car industry. But by the end of the 1960s, there were three American companies (Chrysler, Ford and General Motors which had owned Vauxhall since 1925), plus British Leyland (BL) which by then had taken over production of iconic British brands like Jaguar, Austin, Rover, Triumph, and Morris. At the time, it was the fourth biggest manufacturer in the world, employing over half a million workers. In 1972, it produced as many as 2m cars. 

    However, the new conglomerate had failed to invest and modernise and fell behind its Japanese and European rivals, losing its market share, which fell from 40% to 32% between 1971 and 1973. 

    In 1975, the Labour government effectively nationalised a bankrupt BL. And then the process of making car manufacturing in Britain a profitable, and therefore an attractive investment for private capital, began. Under Labour, a new BL chairman, the notoriously ruthless Michael Edwardes, proceeded to shut down plants and cut jobs. 

    And once labour costs had effectively been reduced, the new Conservative government set about selling the company back to the private sector. 

    First, the Jaguar marque was floated on the stock market in 1984. Other parts of the company followed: parts manufacturer Unipart was sold off in 1987 and a shrunken BL (by then renamed Rover Group) was sold to British Aerospace (BAe) in 1988. 

    In the meantime, by offering access to the European market and subsidies in the form of tax breaks, Thatcher’s government enticed Japanese car companies to set up new manufacturing plants in Britain, starting with Nissan in Sunderland in 1984, closely followed by Toyota and Honda in 1989. 

The turn of screw on car workers

The operations of all of these companies were highly profitable. And for good reason. There were hardly any statutes in place protecting workers’ rights. And in the late 1980s Thatcher managed to remove the few laws which guaranteed the right to strike. The 1980s had seen the defeat of all the big battalions of workers, from steelworkers to coal miners. Union leaders now bent over backwards to make themselves indispensable to the bosses to save themselves from irrelevance. Thus began the era of “partnership” with the bosses. The Amalgamated Engineering Union leaders (now part of Unite) were pioneers in this respect, already signing up to a “no-strike” deal with Nissan in 1985, when it opened its Sunderland plant. 

    Despite joining the European community, the British government refused to join its “social chapter” and adopt employment regulations which at least gave workers some minimal protection against exploitation. It only eventually agreed to the EU working time directive which limited working hours to 48 per week, in 2003, 10 years after it was adopted across the Channel. And then only with the inclusion of a waiver clause which allowed workers to sign away their rights! 

    So it was little wonder that car companies from outside Europe chose to manufacture in Britain. They got a cheaper, more flexible workforce with fewer bothersome union rights and at the same time free access to the European market. And thanks to union partnerships, they proceeded to get away with murder. 

    And then came the systematic removal of security of employment as more and more union officials agreed to the use of temporary workers. 

    This happened at BMW’s Rover in 2000, when TGWU (now Unite) leaders agreed to the use of workers on temporary contracts, going along with the company’s blackmail over the possible loss of the “privilege” to produce the new Mini. When full production started in 2001, a large contingent of agency temps started work. 

    But these were not “normal” temporary workers. They worked for agencies located inside the plant and were employed on contracts which were designed to disqualify them from pay parity - and other protections which later came in under the EU Agency Workers Regulations (2008/10). Today, their contracts still leave them in a precarious situation with few, if any, enforcable rights. And they make up the majority of the production workforce in the plant! 

    In summary therefore, it can be said that prior to the Brexit shenanigans, the advantage Britain offered to EU companies was a cheaper and more flexible workforce (BMW) and to non-EU companies, the same cheap and flexible workforce plus tariff-free access to the EU market, and in addition, the possibility of employing a vast division of labour across all their European plants, based on Just-In-Time production. 

    Car companies were thus able to respond to rising and falling demand, but also able to minimise the effect of strikes in one or other plant, since production could be switched elsewhere at short notice. 

    They could also play off plants against each other, to get away with cuts in conditions. So, for instance in 2004, Ford was able to use the “rivalry” of foreign plants to blackmail the Dagenham Engine Plant workforce into giving up hard-won concessions, by threatening that the new DV diesel engine would be produced in Germany instead. The union officials duly signed on the dotted line. 

    The effect of all this meant that, before 2008, the car industry in Britain was a very profitable enterprise for the companies involved. The rate of exploitation had been increased: from around 3.5 vehicles produced per worker in 1980-4, 9.3 were produced per worker in 2005-9. This was higher than in any other country in Europe at the time. Of course, as this exploitation grew, jobs were cut, so that between 2003 and 2007, more than 60,000 jobs were lost, while the collective turnover of the car companies increased by £7bn!

    By the end of this period, the vast majority of the cars produced in Britain were exported - 77% in 2007, with a total value of £26bn, up from £16bn in 1998. The car industry accounted for 12% of all Britain’s exports, and employed 139,500 workers directly. 

    When the crisis hit in 2007/8, the international car market was also hit. Car bosses responded immediately, all vying to position themselves to weather the storm and come out at the other end with higher profits and a bigger market share. 

    In Britain, JLR, Toyota, Ford, Nissan, Honda and BMW, all cut jobs, first of all targeting their many temporary workers who had been taken on over the decade leading up to the crisis. In some companies, like Vauxhall, job cuts were not made immediately, but instead the threat of them helped its bosses, with the backing of the unions, to impose cuts in wages and conditions. 

Turning the screw another notch

By 2018, direct employment in car manufacturing had risen again - to 165,500. More cars were being made than ever. However, conditions of work were worse than they had ever been. And now bosses turned the screw even further. In the BMW Mini plant, the agency workers who had initially been guaranteed a permanent contract within 5 years, found themselves waiting 8 or 9 years. Automotive output per job between 1999 and 2018 grew 208%(!), compared to 74% in the whole economy. The value produced per job increased from £32,000 to £100,900! 

    But with global sales falling again, (by 2019 the drop was 4.2%, which was bigger than in 2008) car companies geared up for another redistribution of their market. In 2018, GM announced 14,000 job cuts, and closed 7 plants around the world, hoping to save £4 billion annually. In 2019, Ford implemented a “reset and redesign” restructuring plan, cutting 12,000 jobs and closing 6 plants in Europe. Fiat Chrysler and PSA explored a merger, hoping to save £3 billion annually. During 2019 Daimler announced 10,000 job cuts; Audi said it was cutting 10% of its workforce and Nissan announced 12,500 job cuts. 

    In Britain, companies also had to contend with the uncertainty over Brexit. JLR cut 5,000 jobs in 2019, Ford closed its Bridgend plant in September last year, with the loss of 1,500 jobs, and Honda Swindon which employs 3,500 workers is due to close in July 2021. 

Brexit woes for the bosses

As it happened, the Brexit deal between Britain and the EU, signed at the end of 2020, allowed the car bosses to heave a sigh of relief. In the end, it had given them tariff-free EU access. However, companies must now adapt their supply chains to comply with complex “local content” rules. They will need new export certificates, and will have to deal with the uncertainties of delayed parts. Some have already been forced to rely on air freight to ensure parts arrive at plants on time. In the future, due to delays at the border, they may need bigger warehouses, or have to use sea routes, rather than the Channel Tunnel, which could disrupt “Just-in-Time” production. 

    On the other hand, Brexit has provided companies with a useful and ongoing excuse to further restructure their production. BMW, for example, took advantage of “Brexit” shutdowns to retool its Oxford mini production lines to accommodate the electric model. 

    Of course, the pandemic this year has sped up job cuts. JLR cut 1,000 more jobs in July 2020, aiming to save an extra £1bn, on top of the £4bn savings it had already announced. In the BMW plant in Cowley, one of the main subcontractors, Rudolph and Hellmann Automotive, has cut one of its three shifts. On the assembly line, BMW cut 400 “temp” jobs in August. In February 2021, BMW bosses opened a redundancy programme for its permanent workforce. According to the Society of Motor Manufacturers & Traders (SMMT) 13,500 jobs had been lost by the end of 2020. 

Switching to electric

It is in this context that manufacturers are making the transition to EVs. Actually electric cars are not very “new”. The first commercially successful and mass-produced hybrid electric-petrol car, the Toyota Prius, appeared in Japan in 1997, and three years later, in the US and Europe. Over the next few years, a number of these hybrid cars were released by GM, Honda and a few other manufacturers. Their main selling point was that they used less petrol, and so saved frequent drivers money - nothing to do, in fact, with the car bosses giving a damn about “zero-emissions” or “saving the planet”! 

    Toyota is still the dominant hybrid producer, accounting for 52% of hybrid sales in the world in 2019. However, a decade later, fully electric vehicles (EVs), appeared. The 2008 Tesla Roadster was the first EV to use the now common, lithium-ion batteries. The following year, Mitsubishi released the i-MiEV which was the first EV to sell more than 10,000 units. In 2010, the Nissan Leaf became the best selling EV, and remained so until March 2020, when the Tesla Model 3 overtook it, having sold 500,000 cars world-wide. 

    A lot has been made of the increasing popularity of EVs. But in 2019, EVs and plug-in hybrids (which rely on battery power more than traditional hybrid vehicles) together, made up just 2.5% of global car sales. As previously mentioned, in 2020, that increased to 4.2%. 

    The relative “success” of the sales of EVs in 2020, is really a reflection of a trend seen over the past decade and a half: the mass market for cars is shrinking, as working class incomes fall, while the luxury end of the market is growing. And EVs are now the luxury cars par excellence, so all the car companies are scrambling to reap the rewards. 

    The car companies do not know how deep this demand goes. If EVs become cheaper, will more people buy them? As ever, in this capitalist system, this cannot be tested until the cars are produced and are either bought, or remain sitting on showroom forecourts. 

The government’s helping hand

This is where government incentives like scrappage schemes and legislation to cut emissions and ban petrol and diesel cars come in. 

    As a top BMW salesman pointed out, ”Incentivisation obviously has played a very important role in 2020 to really push electrification over a kind of tipping point.” 

    In November 2020, the government said, ”We’ll invest more than £2.8bn in electric vehicles, lacing the land with charging points and creating long-lasting batteries in UK gigafactories.” This is exactly the kind of support that car makers have been angling for. The fact that the British government has said it will phase out sales of petrol cars by 2030, is effectively a guarantee of an electric car market for any car company selling in Britain. 

    It was reported in March 2021 that car companies including BMW, Ford, JLR and Honda, had lobbied the government against banning petrol cars before 2040. Does the fact the government “ignored” them show that the government is acting against their interests? Not a bit! In fact, it just means that the car companies will be needing more government money to “support” them in this transition. 

    Stellantis boss Carlos Tavares put it best: he pointed out that the future of the Vauxhall plant in Ellesmere Port depends ”on the UK government’s willingness to protect some kind of auto industry in their country.” This means subsidies.

    In fact, Nissan says it will now move the production of its Leaf battery from the US to the UK. A spokesman said, there is ”no reason [production] will not be sustainable if we have competitive localisation of the car and battery.” And in a further boost to “competitiveness”, the government has been in talks with Britishvolt to build a new battery plant - a so-called giga-factory - in Blyth, just up the coast from Nissan Sunderland, which will open in 2026. 

And yet another turn of the screw

But alongside subsidies from governments, car bosses are also using the transition to EVs to increase the exploitation of the workforce. No surprise there, of course. A report last year by the German National Platform for the Future of Mobility, stated that the transition to electric cars could mean a loss of half of all jobs in the auto industry in Germany - some 400,000. They point to the fact that electric engines have 200 parts, compared to 1,200 in combustion engines, as well as the fact that overall, EVs have fewer components. 

    While this may be true, this has not, so far, meant a lessening of work for assembly workers who put these cars together. As with any simplification of the production process which capitalism achieves, bosses can use this to cut workers, and make those remaining work even harder. 

    So for instance again, in the BMW Mini plant in Oxford, the introduction of the electric car has meant an intensification of work. Electric and petrol Minis are assembled on the same line, by the same workers. In the same shift, workers will work on both cars, which come down the line one after the other. But on the electric car, there are more processes for the assembly worker to carry out per job, meaning they have to work faster. 

    There are other simplification gains which companies stand to make from EVs too. For example, many companies are taking the approach of being able to make many different models on the same “base”. Not only that, but car companies are working together to cost cut: Ford already shares a “base” with Volkswagen for example, while BMW and JLR have a partnership on electric vehicle technology. 

    In fact, the main cost which makes EVs more expensive than petrol cars for consumers, is the battery. After that cost comes down, car companies stand to make an even greater profit on the simplified assembly process. It is beyond the scope of this article to go into the issue of battery production and the impact this has on the workers involved - from mining of raw materials to final manufacture - let alone the implications for the environment. But some would say these negate EVs’ purported “virtues”. At this stage it is not entirely certain that the transition to fully-electric cars will indeed take place by 2030, given the multiple and conflicting interests involved - including those of the oil industry. However, the oil industry can be relied upon to take care of itself! Shell, for instance, just bought Ubitricity for an undisclosed sum, and is now the owner of the largest electric charging network in Britain! 

    Of course there is no “technical” obstacle to the transition to EVs. Ever since the 19th century, there have been electric cars. Indeed the transition could have started 125 years ago, if it had not been for the ruthless opposition of the oil barons. 

    In fact, the wife of Henry Ford, father of the petrol car with its internal combustion engine, drove an electric car from 1914 until well into the 1930s. Clara Ford’s “Detroit Electric” started instantly, as opposed to hand-cranked combustion engines, and had no mechanical gear changes. It cost about £180,000 in today’s money, but had a reliable range of 80 miles. Almost a century later, a Tesla Model S can be bought for around £73,000 and has a range of around 240 miles. Better, maybe, but this is not very impressive progress, given the lapse of time. 

    Finally, what should be reiterated, is that electric vehicles are not being introduced by the car giants for the sake of the environment, nor do they represent technological progress for humankind. On the contrary, this is just the car industry’s latest profit spinner in the context of a shrinking market, which will squeeze more value out of the working class for less. Real progress will be possible only when the profit system is overthrown. It’s also the only way to save the planet. 

20 April 2021