Germany has an automobile industry with a centuries-old tradition. At least that's true for big names like BMW, founded in 1916. Mercedes was founded in 1926 and the Volkswagen Group – Europe's largest car manufacturer – emerged in 1937. But is the tradition and good name of these brands enough to maintain the solid German automotive business in the current moment of electric transformation of the sector?
The question was in the air these days in which the International Motor Show (IAA, for its German acronym) was held in Munich. Moreover, there were those who asked, according to the pessimistic headline of the influential daily Frankfurter Allgemeine Zeitung: "The beginning of a German decline?"
Despite playing at home, the big German brands have not managed this year at the IAA to get rid of the feeling they had, for example, analysts such as Ferdinand Dudenhöffer, professor at the University of Duisburg-Essen and expert in the German automotive industry. He reminds EL MUNDO that this year's IAA is the "IAA of the Chinese".
Typically, "the list prices of new battery-electric cars in China are up to 60% lower than those of imported vehicles," Dudenhöffer notes. In his opinion, Chinese brands have shown great agility and capabilities to place their products. So much so that Dudenhöffer already sees the Chinese business with the ability to succeed just as the American Tesla has had. The firm of Elon Musk, which has built one of its 'Gigafactories' next to Berlin, has served as a definitive incentive for the German automotive industry to start its journey towards the future, a future that clearly passes through electrification.
But this electrification also represents what they call here "the great transformation of the history" of the sector. And in this transformation, the industry has encountered less state aid than many would have liked. Aid for the purchase of electric vehicles in Germany has an expiration date or is about to expire. For example, the purchase of a plug-in hybrid no longer receives aid and in 2024 the incentives for the acquisition of an electric car are reduced.
The Minister of Economy, the ecologist Robert Habeck, is behind these decisions. That is why Dudenhöffer accuses that particular politician of having "pulled the handbrake" of the German manufacturers. Hence, for Dudenhöffer, the situation of the electric car is more difficult in Germany than in Europe in general, and that the 'old continent' already worries about its evolution. Compared to 2017, car sales have fallen in this part of the world by 22%.
At the Center for Automotive Research (CAR), a think tank where Dudenhöffer works, they estimate that 31,000 fewer electric cars will be sold in Germany this year than in 2022. Thus, there will be 440,000100% electric cars on German roads this year. But the Teutonic automobile industry is not only faced with questions related to electric vehicles. The production of vehicles with combustion engines is not guaranteed a horizon beyond 2035.
An industry under pressure for the end of the combustion engine and Euro 7 regulations
Although Germany defends these engines as a technological option as long as they use synthetic fuels, if that technology manages to become widespread, it does not seem that it will serve to withstand the entire German automobile industry. The combustion engine already represents only a small fraction in the sector. It is estimated that of the 800,000 direct jobs that this industry has, there are about 280,000 employees in the automotive sector who work in the manufacture of cars with combustion engines.
German manufacturers of electric, hybrid or combustion engine cars also have a challenge in the Euro 7 regulation proposed by the European Commission. This regulation seeks, mainly, the reduction of emissions of nitrogen oxides and other substances. It also affects electric vehicles to the extent that they emit particles when they use brakes or when they consume wheels in excess. In Brussels they would like to see this regulation implemented in 2024. There is a long list of countries in favour of speeding up legislation in this regard. There are also influential ones such as France or Italy. But Germany, where concern reigns and strong notes of pessimism in the air, is against it.
"This negotiation has been going on for some time. In principle it is something that could be done. But it is being negotiated in Europe. There are countries in favor, others against," says Dudenhöffer, recalling that the German government is against a rapid entry into force of the Euro 7 regulation. Habeck and Chancellor Olaf Scholz are serving an industry that feels under pressure and has referred to those rules as impossible to implement by 2024.
- Germany