German Chancellor Olaf Scholz is celebrating a small but symbolic victory in the automotive industry’s difficult transition to electric vehicles.
The cause is a 30-year deal between ZF Friedrichshafen and U.S. chip maker Wolfspeed to produce chips for EVs in Saarland, a region in Germany’s western corner that is deeply tied to the internal combustion engine, whose economy is in decline. It’s on a billion-dollar contract.
The project is seen as a symbol of optimism for the tens of thousands of workers in Germany’s auto industry who are worried that the move to electric vehicles will put them out of work.
The global shift to EVs and the race to make them cheaper has forced traditional automakers such as BMW, Mercedes-Benz and Volkswagen to rethink and sometimes reinvent decades-old production practices. I am forced to.
In Germany, where some 786,000 people are employed by automakers and parts suppliers, this shift carries a wide range of economic, social and political risks.
The ZF and Wolfspeed announcements are particularly timely for Saarland. More than a dozen automotive suppliers employ around 44,000 people in Saarland to manufacture components such as automatic transmissions, diesel injection technology and motor blocks.