Initial processing of Ricardo vehicle simulation modeling CO2 data
Working Paper
Summary of Eastern EU labor rate impacts on EU cost curves
This paper discusses the impacts of Eastern EU labor rates on CO2 benefit and cost curves for EU light-duty vehicles in the 2020–2025 timeframe. IT is the fourth in a series, with the previous three papers describing the methodology and data used to generate CO2 cost curves for EU vehicles. Those papers have been published as ICCT Working Papers 2012-4, 2012-5, and 2013-1.
The previous EU studies assumed that all components were produced in Germany and thus all cost factors were based on the labor rates in Germany. In a cost sensitivity analysis, labor costs were estimated for six Eastern EU countries (Slovenia, Czech Republic, Hungary, Poland, Slovakia, and Romania) and compared to labor costs in Germany. As a result, an average scaling factor of 23% was determined for Eastern EU labor costs, i.e. labor costs were estimated to be 77% lower when compared to Western EU. Consequently, on average an hourly direct labor rate of €7.75 for suppliers and €10.29 for vehicle manufacturers were estimated for Eastern EU. The previously developed EU cost curves used the German labor rates, which on average were estimated at €33.28 per hour for suppliers and €44.16 for vehicle manufacturers. As a result, when compared to Western EU, the average costs of advanced technologies being produced in Eastern EU were estimated to be lower by 2.3% to 21.3% . This paper explains how the results of the Eastern EU labor cost sensitivity analysis affect the cost curves developed and explained in previous papers in this series.
