Economic effects of E-mobility scenarios in the context of intermediate interrelations and consumption

The number of passenger cars with electric drives in Germany has nearly quadrupled in the last three years. Even though electric vehicles (EV) still hold less than 1% of the registrations, expectations are high for the future. E-mobility is expected to change the way cars are produced as well as households’ expenditures, as EV could hold 10 to 20% of new cars in 2030. The possible impacts on the economy are manifold; but thus far most studies use microeconomic methods to describe parts of the system changes or they analyze effects of investment in infrastructure. This ignores that manufacturing of cars with electric drives need different – and fewer - inputs than a car with a combustion engine. Therefore, long-term changes in the value chain are going to occur with impacts on the whole economy. In Germany E-mobility is pushed not only to gain or maintain the automotive industry’s shares in the global market but also to use potentials for a greener mobility. The aim is to stronger diversify the energy base in the transport sector and to develop potentials for the use of renewable energies. The objective of this contribution is to show the economic effects of both changing input-output relations and energy use by comparing two scenarios with different shares of electric or other alternative drives in passenger cars. Both indicators of resource use and employment are analyzed on an aggregate and a sector specific level. The analysis is based upon simulation results obtained with the macroeconometric model PANTA RHEI. PANTA RHEI has a macroeconometric simulation and forecasting model at its core, which consistently describes the annual inter-industry flows between the 59 sectors, their contributions to personal consumption, government, equipment investment, construction, inventory investment, exports as well as prices, wages, output, imports, employment, labor compensation, profits, taxes, etc. for each sector as well as for the total economy. The transportation module within the model describes traffic performances of all transport sectors and includes vehicle stocks with fuel or technology categories. Traffic and its modal split are extensively linked with private consumption, intermediate inputs and energy use. To analyze specific implications of drive technologies in cars the transportation module was extended and specific links to the energy use were established. Intermediate inputs between manufacturing industries were changed aligned to the technological transition. To examine the economic effects of a stronger market penetration of EV in Germany our analysis applies PANTA RHEI to two scenarios: a business as usual scenario and a scenario with an increased share of EV among new cars. Both scenarios are implemented in the macro-econometric model PANTA RHEI. The respective differences in economic indicators, such as employment, GDP etc. can then be attributed to more e-mobility in the scenario, since all other factors are held equal. Changes in volumes and prices are fully accounted for. The simulation model runs until 2030. In the scenario with an increased share of EV among new cars the government target of 6 Mio EV in 2030 is met, which is 14% of all vehicles. The long useful life period of cars leads to a rather long term transition. In the business as usual scenario 3.2 Mio personal vehicles with electric drives are operated at the end of the time horizon. The results show that the upcoming shifts in structures of manufacturing and consumption described in the model are not leading to strong macroeconomic effects. In the long term they are found to be negative, as increasing demand in electrical industry is overcompensated by decreasing demand in the automobile industry and related suppliers as well as (traditional) gas stations. Energy consumption in the EV-scenario is lower than in the reference, and so is the import of fuels. The way the well-established automotive value chain is adapting to the upcoming new technologies is very critical for the economic effects in Germany. The strong interlinkages within the automotive industries potentially imply self-energizing effects. Given the past structures these effects are rather negative as capacities for manufacturing electrical drives and batteries are not part of the – often metal-related – sectors. In the scenario analysis employment is higher in the electrical industry and in the energy sector. From 2020 on especially the lower employment in the automobile industry and gas stations lead to a slightly negative or rather balanced net employment effect.