"The previous success factors for German car manufacturers no longer count for the age of electric drives. The options available to car managers depend largely on the general conditions - but there is one area where they should definitely not cut corners.
Is the German car industry, especially Volkswagen, already in the middle of a fight for survival? The alarm call from the Volkswagen board was received with concern and sometimes a little glee across the borders, as if the decline is almost unstoppable
But it is still a long way from that. After profitable years, the balance sheets of the German car companies contain enough reserves to survive a crisis and a dry spell. What they cannot afford is a progressive erosion of profitability, which would not only mean shrinking profits, but also fewer opportunities for research, development and investment in new technology.
But the problems do not lie solely in the companies, but in the foundations of the car industry. Disadvantages of Germany as a location, such as high wages, aging infrastructure and growing bureaucracy, are always in the spotlight.
Structures that have so far been specific to the automotive industry are those that have managed to compensate for many disadvantages: synergies that are rare elsewhere arise for Germany's automotive companies from the closely knit network that the automotive industry forms with suppliers or universities, with many advantages for technical development or supply chains - a cluster.
The German manufacturers have also benefited so far from the fact that they mainly produce premium and luxury cars in the country, with higher margins that also finance advanced technology and thus attract demanding buyers with a high willingness to pay. Ultimately, the German manufacturers have nevertheless managed to achieve high unit volumes and large economies of scale across several brands with platform and modular strategies, especially Volkswagen. Sales in China have also made a decisive contribution to the high sales figures with economies of scale.
Disadvantages instead of old synergies
But these fortunate circumstances apply to the world of combustion engines.
In the world of electric cars, there are additional disadvantages for the time being: There is no network of suppliers and researchers for the time being. The most important and most expensive parts, the battery cells, come mainly from Asia for the time being. Cooperation with Americans is usually necessary for the software. It is still difficult for electric cars to design unique selling points like those of combustion engines "Made in Germany".
There is no question of economies of scale since the surprising abolition of the environmental bonus for electric cars brought the market to a standstill. The EU tariffs against China, including the prospect of tough countermeasures, could further limit the number of units and economies of scale. This is because access to the world's largest car market would be difficult for production from Germany, and the production of niche models of German brands in their own factories in China would be unnecessarily expensive.
German and European politics have failed to create similarly favorable conditions in the electric world as in the successful years of combustion engine production. For significantly increasing numbers and economies of scale, very fast charging stations on long-distance routes, including at motorway service stations, are just as necessary as fast and comprehensive power supplies for charging at home and at work. For the German car cluster to continue to exist in times of electric drive, a larger part of the battery supply chain would also have to be located in Germany.
It would be legitimate for the state to appropriately share in the risks that arise from friction between the ramp-up of battery production and the e-car market. First of all, a clear commitment to the car industry in Germany and to premium products would also help. This is difficult for those who secretly want to abolish a large part of the car industry with ever higher demands.
It doesn't help to demand the production of cheap cars in Germany, which would remain an illusion with German costs.
Ultimately, the framework determines the options available to top managers in the car industry. They are often criticized, especially for the failures of their predecessors. Because the cycles for the development of new technology and models take many years.
Now it is up to them to set the course for the future, to have the courage to take major development steps and to search for new design icons. It would be fatal if they were to cut back on products. Banal and cheap-looking cars are everywhere. Germany, on the other hand, must remain premium." [1]
So, the French sell luxury accessories. The application of artificial intelligence is not very suitable for this. The Germans dream of selling luxury electric cars, which are also not suitable for the application of artificial intelligence. The age of artificial intelligence has arrived. You don't think we'll all be here eating frogs and herding goats and the world will go the other way?
1. Nun ist ein Bekenntnis zur Autoindustrie nötig. Frankfurter Allgemeine Zeitung (online). Frankfurter Allgemeine Zeitung GmbH. Sep 8, 2024. Von Tobias Piller
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