Fraunhofer Study Warns of Massive European Auto Industry Job Losses by 2040
Fraunhofer warns the European auto industry could lose up to 726,000 jobs by 2040, driven by powertrain shifts, manufacturer cuts and supply-chain decline.
The Fraunhofer Institute’s analysis, commissioned by employer association Gesamtmetall and reported by several outlets, projects deep and sustained job losses across Europe’s automotive supply chains. The research centers on components and processes tied to vehicle powertrains, a segment that employed about 1.6 million people last year and generated roughly €250 billion in value added. Without targeted measures, the institute warns Europe could become structurally dependent on non‑European suppliers for critical technologies.
Study scope and headline figures
The Fraunhofer analysis examines the full value chains that produce parts for vehicle propulsion systems, from component suppliers to assemblers and specialized engineering firms.
Its headline projection is a potential reduction of up to 726,000 jobs across Europe by 2040, with intermediate losses of about 375,000 posts by 2030 and roughly 660,000 by 2035.
Researchers based their calculations on current employment, sectoral productivity trends and expected shifts in demand as vehicle powertrains evolve, producing a worst‑case scenario if no countermeasures are implemented.
How the timeline unfolds through 2030 and 2035
The study’s short‑term forecast indicates that nearly half of the projected total decline could occur before 2030, reflecting rapid changes already under way.
By 2035 the cumulative loss could exceed two‑thirds of the worst‑case figure, driven by accelerating market penetration of alternative powertrains and the consolidation of supplier roles.
Analysts stress that these milestones are sensitive to policy choices, speed of technological adoption, and the commercial strategies of major manufacturers.
German industry trends and announced workforce cuts
Germany, Europe’s largest car market and manufacturing base, has already seen a marked downshift in employment in recent years.
Federal statistics show that 2025 recorded roughly 50,000 fewer people working in the German auto industry than the previous year, a fall of about 6.3 percent and the lowest level of employment since 2011.
Several major manufacturers have publicly announced cost‑cutting programs and consultations with works councils, while Volkswagen has signalled a global workforce reduction of around 100,000 and plans to close four plants in Germany.
Concentration of impact in powertrain suppliers
The sectors most exposed are suppliers of internal combustion engine components, transmissions and related drivetrain systems, which face shrinking demand as electrified and alternative powertrains gain share.
These supplier firms often operate thin margins and extensive subcontractor networks, making them vulnerable to order volatility and relocation of final assembly to lower‑cost regions.
The loss of specialized jobs in these segments also risks eroding technical know‑how that underpins broader industrial capabilities.
Strategic risks to European technological sovereignty
Fraunhofer and Gesamtmetall warn that unchecked declines could create a lasting reliance on third‑country suppliers for batteries, power electronics and other strategic components.
Such dependence would have implications for industrial resilience, bargaining power in global value chains, and the capacity to set technical standards.
Policy makers and industry groups are being urged to consider interventions that preserve critical skills and production capacity while enabling the transition to new technologies.
Proposed responses from industry and policy circles
Options under discussion include targeted public investment in strategic component manufacturing, incentives for research and domestic supply‑chain development, and expanded retraining programmes for affected workers.
Industry players are also exploring supplier consolidation, new partnerships, and shifts in production footprints to balance competitiveness with job preservation.
Trade unions and works councils have called for negotiated social plans and stronger state support for regions with concentrated supplier networks.
The scale and timing of the projected job losses make the coming decade pivotal for Europe’s automotive ecosystem, with policy choices, corporate strategy and technological adoption determining whether the decline is managed or accelerates into structural dislocation.
