Automotive Supply Chain in Europe: Up to 726,000 Jobs at Risk by 2040

A new market survey by Fraunhofer IAO, commissioned by Gesamtmetall, the association of German metalworking companies, quantifies the impact of the transition to electric vehicles on the supply chain related to engines, transmissions, drivetrains, and related parts of the automotive industry. The report estimates a net loss of 726,000 jobs in production by 2040, with a gradual increase that starts from 375,000 jobs lost by 2030.

The sector analyzed covers the entire supply chain related to powertrain components, from engines to transmission systems, which in 2025 employed about 1.6 million people in Europe, with an estimated added value of 250 billion euros. According to projections, by 2035 the total would rise to 660,000 jobs lost, before reaching the final figure for 2040.

Why Electric Vehicles Are Costing Jobs for Suppliers

The technical reasons indicated by the study have been known to industry insiders for a long time: an electric powertrain requires fewer components and less complex production processes compared to an internal combustion engine, with particularly heavy effects on second and third-tier suppliers, those currently working on injection systems, transmissions, and exhaust systems. Fraunhofer IAO also points out that, without policy interventions, Europe risks becoming permanently dependent on third countries for key electric mobility technologies, from battery cells to power components.

This issue is intertwined with what emerged in May 2026 from the VDA, the association of the German automotive industry, which had already revised downward the national employment estimates: in Germany alone, an additional 125,000 jobs are at risk by 2035 for the same reason, namely the reduced production complexity of battery-operated vehicles compared to traditional ones.

The ELAB2040 study, moreover, does not arise from nowhere: it is part of the series of ELAB research initiated by Fraunhofer IAO back in 2018 with ELAB 2.0, which at that time estimated a negative balance of around 75,000 jobs in the production of powertrains in Germany alone, partially offset by 25,000 new positions related to batteries and power electronics. The main difference with the current edition is the geographic scope, expanded to the entire European Union, and the temporal horizon pushed out to 2040, in addition to the additional variable represented by the EU regulatory scenarios compared in the study.