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The automotive industry is ripping out its technical core, to transplant a new core.
Additionally, it is about survival much like any transplant.
By 2030, 30% of all new cars sold will be an EV.
Electric cars don’t need complicated engines and gearboxes, which make up 60% of a car’s value.
Emission standards and EV subsidies prompted the switch to electric.
There’s more.
For the first time in Europe, lightweight, low-cost electric vehicles will be cheaper than conventional vehicles due to EU7 emission standards and exhaust gas treatment cost increases. Thus, 60% of this market segment’s technological skills will quickly become obsolete.
OEMs are world-class at training factory workers.
12 million people work in the automotive industry, according to the European Automobile Industry Association. This is the population of Belgium, Greece, or Sweden.
For complex manual labor, the automobile industry has adopted and optimized the slow, but effective, on-the-job “apprentice learning” method. For decades, factory workers have been trained in every step of car assembly.
This learning approach has spread to offices: when an employee moves from the assembly line to the office, they bring this learning approach with them. As a result, the “apprenticeship approach” governs all training in automotive.
At the rate at which technology is changing in the automotive industry, this learning strategy is too slow. Car companies that do not accelerate skill change will go out of business, quickly.
Unfortunately, past successes are the biggest obstacle for the future.
Automotive managers are taught to learn on the job.
Thus, automotive white-collar technical skills training is scarce.
We interviewed 34 senior auto managers over the past year. Only 25% could recall any formal training. But even among those who received training, the focus was on leadership and conflict resolution, not technical skills.
The industry invested € 250 billion into the technology shift. But the lack of formal white-collar technical skill training cannot be attributed to a lack of money.
A tens-of-billion-dollar investment in technical skill training is required until 2030.
Tesla exemplifies the technical skills needed for the electric future: customer data-driven engineering, EV cost manufacturing, Artificial Intelligence, automotive chip design, new business models, and improved battery technology, charging electrics, and car software.
Of course, automakers are aware of this:
- BMW extended the average training time from two to four days.
- Mercedes-Benz has announced a learning initiative worth €1.3 billion.
- Audi increased the number of training days from three to six.
Learning became more efficient during the pandemic: web-based training reduces costs and accounts for 80% of all training. Classroom instruction is becoming increasingly rare.
However, this shift in focus will not end here.
This creates an automotive learning market in the billions every year.
As the car industry adopts new technology, technical abilities must be upgraded.
Naturally, reskilling all 12 million employees is impossible.
A hypothetical industry learning budget estimate is as follows:
- 15% of workers are re-trained.
- Up to 25% of employees are up-skilled.
- The remaining employees would be provided updated training programs.
The technological shift will result in incremental investments ranging from €35 to €42 billion in technical skill learning. To stay viable, the sector needs to spend a lot of money.
Boatloads of money.
And, within the next five to ten years, this money will spur new incumbents to create engaging, effective, scalable, and cost-effective technical learning for the automotive industry.
TL; DR
- The transition to EVs will render approximately 60% of technical skills obsolete.
- The automobile industry leads in factory worker training but lags in office worker technical training.
- A portion of Europe’s 12 million automotive employees must be up skilled or reskilled.
- This will necessitate investments ranging from €35 to €42 billion in technical skill training, sparking a wave of innovative, scalable, and cost-efficient learning programs for Automotive.
