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Germany’s car industry has a libido problem Chinese imports have sparked an existential crisis

Angela Merkel behind the wheel of a VW prototype in 2007. Torsten Silk/DDP/AFP via Getty Images

Angela Merkel behind the wheel of a VW prototype in 2007. Torsten Silk/DDP/AFP via Getty Images


May 24, 2023   5 mins

Growing up as a German kid in Britain in the Seventies and Eighties, one of the things that left a lasting impression on me during our annual visit to my German grandparents was sitting in the back of their Mercedes S-Class and roaring down the four-lane autobahn at 130mph. Germany felt slick and futuristic compared to life in our sleepy, slightly scruffy village in Surrey.

Decades later, Germans are as obsessed with their cars as ever. But the autobahns are choked with traffic, and large, growling combustion engines capable of demonic speeds seem, to many, hopelessly out of sync with Germany’s self-proclaimed global leadership on environmental protection and climate change.

And so the shine is coming off German car manufacturing. Headlines such as “Share of e-cars imported from China into Germany more than triples” will sound scary if you’re VW, Audi and co. Yet official German sales statistics for April show that domestic models still occupy eight of the top 10 spots, with VW models featuring in four places. Chinese electric models and Teslas are nowhere to be seen. The ID-3 and ID-4, VW’s electric models, far outsell Elon Musk’s machines.

Germany, however, represents a tiny slice of the global car market these days. VW has long since been set on conquering the Chinese market and has done astonishingly well there. But its sales in China fell by 15% in the first quarter, including a 40% drop for electric cars. The bigger picture suggests that there is indeed cause for alarm.

The world’s largest carmaker, the Volkswagen Group, still towers over the rest, following a brief drop to second place under Toyota after the deeply embarrassing diesel scandal eight years ago, when California researchers discovered defeat software that allowed VW to fake their cars’ nitrogen oxide emissions during testing. Dieselgate, which has so far cost VW more than €30 billion in fines globally, is far from over, and threatens to inflict further damage on the brand. Earlier this month, on the 166th day of his fraud trial, Rupert Stadler, former CEO of Volkswagen subsidiary Audi, changed his mind about what he knew about emissions cheating and pleaded guilty. He is now expected to face a €1.1 million fine rather than prison.

Stadler is the first senior VW German executive to admit wrongdoing. He confessed to allowing the sale of cars to continue even though he knew they contained the emissions manipulating software. Until now, VW higher-ups had insisted they had been unaware of their engineers’ cheeky tinkering. The trial of Martin Winterkorn, former Volkswagen CEO, is on hold due to ill health, but the Stadler confession will embolden fresh lawsuits. Thousands of German drivers are already suing VW and its marques for damages — and a total of 10 million cars on German roads could, in theory, be affected. The financial consequences of damages at that scale could eviscerate the industry, which would prefer to leave Dieselgate in the rear-view mirror.

The affair was the death knell for “clean diesel”, which, ludicrously, had been sold around the world as a green fuel, not least by German manufacturers who stubbornly insisted that petrol and diesel internal combustion motors had a bright future, despite much of the industry elsewhere placing its chips on electric. Germany’s sprawling car industry is built around these two, 19th-century motor technologies, with suppliers such as Bosch and hundreds of smaller Mittelstand firms supplying VW, BMW, Daimler, Opel and Porsche — not to mention large foreign-owned factories for Ford and Tesla. By some estimates, car manufacturing accounts for €500 billion in revenue and employs, directly and indirectly, 10 million people. Electric cars, by contrast, are essentially computers on wheels, contain far fewer mechanical components and require less factory labour and more software coders.

It’s no surprise, then, that the sluggish, reluctant switch to electric has been painful. Until last year, when Musk opened a “gigafactory” for Tesla SUVs and batteries at the gates of Berlin, German car management and unions, lobbyists and politicians were all largely in denial about the need for a radical transformation. It’s too early to tell whether domestic brands can fend off Tesla, with its bottomless market cap and the threat of cheap Chinese imports.

Yet resistance to electric cars is as cultural as much as it is economic. As Ulf Porschardt, editor-in-chief of Die Welt, has written: “Internal combustion engines made by Porsche, Maserati and Lamborghini were, and are, high culture. To stop making them is as if Beethoven had stopped after the 7th Symphony, or Wagner had finished the Ring after Siegfried.”

Dramatic stuff. But depending on who you ask, Porschardt is either a shameless apologist for the country’s most corrupt and powerful industry and its dangerous, polluting and climate-destroying products — or else he’s an apostle of the values that the car has embodied in both German and Western, post-Second World War culture.

In his history of the iconic Porsche 911, Porschardt regularly defends the absence of a speed limit on German motorways: “The autobahn is the last place where we enjoy more freedom than others in the world.” It is no coincidence that Porschardt supports the Free Democratic Party, a tiny, liberal and pro-car party which recently derailed plans, pushed by its Green coalition partner, to introduce a speed limit of 130kph. Debate over driving speeds resurfaced last year as Germany attempted to reduce its dependency on Russian oil: lower speeds means lower fuel use, lower emissions and fewer accidents. But with a majority of Germans now favouring a speed limit, Porschardt and his fellow travellers are on the losing side of this very German culture war.

The car, and its place within German society, has never been so furiously debated. In Berlin, there is bitter opposition to a proposed extension of an inner-city motorway through densely populated neighbourhoods. The capital is positively brimming with community groups keen to create low-traffic “superblocks”, as Barcelona has done.

Yet, in spite of the Greens’ participation in the Scholz coalition, new motorways continue to be proposed across the country. In response, a radical new climate movement, Letzte Generation, has sprung up, so named because they believe they are the last generation that can prevent catastrophic climate change before dangerous tipping points kick in. For them, the unfettered use of “motorised individual transport”, as they prefer to call cars, must be restricted. And so they have taken to supergluing themselves to intersections and exit slipways, causing horrendous rush-hour traffic jams, sometimes even to the hindrance of emergency vehicles. This, somehow, is supposed to pressure the government to adopt more effective climate policies.

The Kulturkampf around das Auto shows no signs of slowing. Germans’ obsession with driving is deeply associated to West Germany’s emergence as an economic powerhouse from the ashes of the Second World War. According to one intriguing, provocative theory, made by writer Mia Raben in her essay “The Incapacity to Brake”, the post-war obsession with speed is directly related to Germans’ refusal to face up to the reality of what their country did to the world under Hitler, a leader, she says, they adored. “The object libido has migrated from the FĂŒhrer to the car,” she wrote.

Raben’s essay title referred to a famous 1967 book, The Incapacity to Mourn, which took a psychoanalytical approach to explaining why it was so hard for ordinary Germans to look the crimes of the Nazis in the face. Even today, everything is somehow explained by the war, from the national obsession with cars to the misplaced radicalism of the environmentalists who oppose them. When I think of my grandparents — who very much belonged to the Hitler generation, and spent their lives avoiding the question of guilt for war and genocide — and how they thundered across the glittering autobahn, there is some sense to this theory. I wouldn’t be surprised if, by travelling at the highest speeds possible in their shiny, powerful Mercedes, they weren’t trying to outrun their past.


Maurice Frank co-founded the English magazine Exberliner and now co-writes the newsletter 20 Percent Berlin. 

mauricetfrank

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Jim Veenbaas
Jim Veenbaas
1 year ago

Automakers are in a very awkward spot right now. I doubt traditional manufacturers like VW and Ford want to build EVs. They’re more expensive, the supply chains are vulnerable and demand for them is artificial. Yet they really have no choice. Regulators across the west are forcing them to do it. What happens in the grid can’t accommodate a massive influx of EVs, or if battery production becomes untenable because of supply issues? This could get real messy for the car industry.

Nicky Samengo-Turner
Nicky Samengo-Turner
1 year ago
Reply to  Jim Veenbaas

All more eco sandaloid fascism

Simon Adams
Simon Adams
1 year ago
Reply to  Jim Veenbaas

But they are responding as if they want to avoid anyone being excited. VW for example have nothing to even come close to the Golf Gti or Golf R, and charge more for the privilege of being bored.

Nicky Samengo-Turner
Nicky Samengo-Turner
1 year ago
Reply to  Jim Veenbaas

All more eco sandaloid fascism

Simon Adams
Simon Adams
1 year ago
Reply to  Jim Veenbaas

But they are responding as if they want to avoid anyone being excited. VW for example have nothing to even come close to the Golf Gti or Golf R, and charge more for the privilege of being bored.

Jim Veenbaas
Jim Veenbaas
1 year ago

Automakers are in a very awkward spot right now. I doubt traditional manufacturers like VW and Ford want to build EVs. They’re more expensive, the supply chains are vulnerable and demand for them is artificial. Yet they really have no choice. Regulators across the west are forcing them to do it. What happens in the grid can’t accommodate a massive influx of EVs, or if battery production becomes untenable because of supply issues? This could get real messy for the car industry.

Tony Taylor
Tony Taylor
1 year ago

You assert the German car industry has a libido problem, and yet you disprove your assertion with a picture of hot German cheesecake.
Signed
VW Driver, Heidelberg

Last edited 1 year ago by Tony Taylor
L Walker
L Walker
1 year ago
Reply to  Tony Taylor

Lotta cheesecake in display in that picture.

L Walker
L Walker
1 year ago
Reply to  Tony Taylor

Lotta cheesecake in display in that picture.

Tony Taylor
Tony Taylor
1 year ago

You assert the German car industry has a libido problem, and yet you disprove your assertion with a picture of hot German cheesecake.
Signed
VW Driver, Heidelberg

Last edited 1 year ago by Tony Taylor
D Walsh
D Walsh
1 year ago

The decline of the German car industry is a good thing, it produces far too much pollution, Europe and Germany need to follow the example of South Africa, as the South African electrical grid collapses they are producing far less pollution, great news

Europe and Germany will be far better off without all that industrial pollution, three cheers for Vladimir Putin and the Russians who blew up the Nordstream

Jim Veenbaas
Jim Veenbaas
1 year ago
Reply to  D Walsh

No need to worry. Germany and the rest of Europe have this nailed. They have much more experience dismantling the energy industry than South Africa. They might lag in blackouts right now, but they’ll catch up. I have complete confidence in European leadership in this regard.

George H
George H
1 year ago
Reply to  Jim Veenbaas

On the contrary. Shutting down its nuclear generation capacity made it very clear that “Germany’s self-proclaimed global leadership on environmental protection and climate change” is a cynical lie.

Ethniciodo Rodenydo
Ethniciodo Rodenydo
1 year ago
Reply to  Jim Veenbaas

Don’t forget GB and Edward Health led the way in 1973/4

Nicky Samengo-Turner
Nicky Samengo-Turner
1 year ago

ahh Mr Rent Bouy

Nicky Samengo-Turner
Nicky Samengo-Turner
1 year ago

ahh Mr Rent Bouy

George H
George H
1 year ago
Reply to  Jim Veenbaas

On the contrary. Shutting down its nuclear generation capacity made it very clear that “Germany’s self-proclaimed global leadership on environmental protection and climate change” is a cynical lie.

Ethniciodo Rodenydo
Ethniciodo Rodenydo
1 year ago
Reply to  Jim Veenbaas

Don’t forget GB and Edward Health led the way in 1973/4

N Satori
N Satori
1 year ago
Reply to  D Walsh

I’m sure the workers of the Ruhrgebiet were filled with joy when their masters opted for rationalisation and restructuring (ie. moving as much of that dark satanic production as possible to China). In 2001 Essen’s entire Thyssen-Krupp steel plant was sold, dismantled and taken to China for reassembly there. Still, not to worry. The Ruhrgebiet now has rewilding, theme parks, green tourism, that kind of thing.

Last edited 1 year ago by N Satori
Samir Iker
Samir Iker
1 year ago
Reply to  D Walsh

If any country that is as obsessed with “green” and CO2 emission reduction as Germany, while also simultaneously closing down nuclear….
Then that collection of nutjobs do not deserve to be taken seriously, and good riddance when they go down the South Africa path. Though Germans being Germans, even under the worst of circumstances (which is also the likely scenario at this point) they will be a much better run country than South Wakanda.

And what I hear is, typical Germans genuinely do believe it was Putin who blew up his own pipeline. Which is not a surprise, really.

Last edited 1 year ago by Samir Iker
Nicky Samengo-Turner
Nicky Samengo-Turner
1 year ago
Reply to  D Walsh

What about the pollution in extracting minerals for batteries, for building EVs, transporting them and creating electricity for them? Sad that so many mind lemmings fall for this eco zealot drivel! Leccy cars are no better than any other cars, and Germany has the technology to produce low emission diesel and petrol cars that, if you had an iota of knowledge about automotive engineering, you would know about.

Jim Veenbaas
Jim Veenbaas
1 year ago

And now we hear the extra weight of EVs is causing more particulate matter -from rubber burning off tires.

Jim Veenbaas
Jim Veenbaas
1 year ago

And now we hear the extra weight of EVs is causing more particulate matter -from rubber burning off tires.

Jim Veenbaas
Jim Veenbaas
1 year ago
Reply to  D Walsh

No need to worry. Germany and the rest of Europe have this nailed. They have much more experience dismantling the energy industry than South Africa. They might lag in blackouts right now, but they’ll catch up. I have complete confidence in European leadership in this regard.

N Satori
N Satori
1 year ago
Reply to  D Walsh

I’m sure the workers of the Ruhrgebiet were filled with joy when their masters opted for rationalisation and restructuring (ie. moving as much of that dark satanic production as possible to China). In 2001 Essen’s entire Thyssen-Krupp steel plant was sold, dismantled and taken to China for reassembly there. Still, not to worry. The Ruhrgebiet now has rewilding, theme parks, green tourism, that kind of thing.

Last edited 1 year ago by N Satori
Samir Iker
Samir Iker
1 year ago
Reply to  D Walsh

If any country that is as obsessed with “green” and CO2 emission reduction as Germany, while also simultaneously closing down nuclear….
Then that collection of nutjobs do not deserve to be taken seriously, and good riddance when they go down the South Africa path. Though Germans being Germans, even under the worst of circumstances (which is also the likely scenario at this point) they will be a much better run country than South Wakanda.

And what I hear is, typical Germans genuinely do believe it was Putin who blew up his own pipeline. Which is not a surprise, really.

Last edited 1 year ago by Samir Iker
Nicky Samengo-Turner
Nicky Samengo-Turner
1 year ago
Reply to  D Walsh

What about the pollution in extracting minerals for batteries, for building EVs, transporting them and creating electricity for them? Sad that so many mind lemmings fall for this eco zealot drivel! Leccy cars are no better than any other cars, and Germany has the technology to produce low emission diesel and petrol cars that, if you had an iota of knowledge about automotive engineering, you would know about.

D Walsh
D Walsh
1 year ago

The decline of the German car industry is a good thing, it produces far too much pollution, Europe and Germany need to follow the example of South Africa, as the South African electrical grid collapses they are producing far less pollution, great news

Europe and Germany will be far better off without all that industrial pollution, three cheers for Vladimir Putin and the Russians who blew up the Nordstream

Nicky Samengo-Turner
Nicky Samengo-Turner
1 year ago

The great majority of people do not give a damn, are not dystopian totalitarian eco sandaloid climate zealots, and do not want electric cars, let alone be forced to have them: this biased myopic piece is little more than national socialist propoganda, and I’m only suprised that there was no racism and lbgt angle?

Cho Jinn
Cho Jinn
1 year ago

It also doesn’t mention Trump and Hitler in the same sentence – are they even trying anymore?

Cho Jinn
Cho Jinn
1 year ago

It also doesn’t mention Trump and Hitler in the same sentence – are they even trying anymore?

Nicky Samengo-Turner
Nicky Samengo-Turner
1 year ago

The great majority of people do not give a damn, are not dystopian totalitarian eco sandaloid climate zealots, and do not want electric cars, let alone be forced to have them: this biased myopic piece is little more than national socialist propoganda, and I’m only suprised that there was no racism and lbgt angle?

Peter B
Peter B
1 year ago

So the FDP is a “tiny party” then ? Historically the third largest party in Germany, frequently (and still) in the governing coalition. Apparently 11.5% vote share and 92 out of 736 members in the Bundestag.
And that was written by someone actually living in Germany !

Last edited 1 year ago by Peter B
Peter B
Peter B
1 year ago

So the FDP is a “tiny party” then ? Historically the third largest party in Germany, frequently (and still) in the governing coalition. Apparently 11.5% vote share and 92 out of 736 members in the Bundestag.
And that was written by someone actually living in Germany !

Last edited 1 year ago by Peter B
James Stangl
James Stangl
1 year ago

I wonder whether the German auto makers aren’t looking at Toyota with some envy, given Toyota’s investment in hybrid and hydrogen ICE tech.

EVs are all well and good if you 1) have a robust infrastructure for charging them, and 2) accept their current range and payload limitations. What about hauling cargo? To say nothing about the environmental impact of current mining for the materials that go into batteries.

I think that ICE/hybrid technology will still be around for a while, especially when the greenies finally get out of their cloud-cuckoo land of Net Zero.

James Stangl
James Stangl
1 year ago

I wonder whether the German auto makers aren’t looking at Toyota with some envy, given Toyota’s investment in hybrid and hydrogen ICE tech.

EVs are all well and good if you 1) have a robust infrastructure for charging them, and 2) accept their current range and payload limitations. What about hauling cargo? To say nothing about the environmental impact of current mining for the materials that go into batteries.

I think that ICE/hybrid technology will still be around for a while, especially when the greenies finally get out of their cloud-cuckoo land of Net Zero.

Josef O
Josef O
1 year ago

The name Mercedes is a twisted prank of history. The name comes from the daughter of a Jewish businesman, Emil Jellinek. He was also a diplomat of the Austro-Hungarian Empire in Nice. He fell in love with cars and asked Daimler-Benz to call a car Mercedes, as the name of his daughter. This is a revenge of history, Hitler’s car was bearing the name of a Jewish girl. I wonder if he knew it, in case he did, Hitler chose to look the other way.

Josef O
Josef O
1 year ago

The name Mercedes is a twisted prank of history. The name comes from the daughter of a Jewish businesman, Emil Jellinek. He was also a diplomat of the Austro-Hungarian Empire in Nice. He fell in love with cars and asked Daimler-Benz to call a car Mercedes, as the name of his daughter. This is a revenge of history, Hitler’s car was bearing the name of a Jewish girl. I wonder if he knew it, in case he did, Hitler chose to look the other way.

Andrew H
Andrew H
1 year ago

” the post-war obsession with speed is directly related to Germans’ refusal to face up to the reality of what their country did to the world under Hitler, a leader, she says, they adored.” What utter rubbish. No country has done more to face up to its historic crimes than Germany, even placing a memorial to its own shame in the centre of its capital. And the FDP are hardly a tiny party.

Ethniciodo Rodenydo
Ethniciodo Rodenydo
1 year ago
Reply to  Andrew H

In the modern world no amount of atonement or debasement is ever enough

Ethniciodo Rodenydo
Ethniciodo Rodenydo
1 year ago
Reply to  Andrew H

In the modern world no amount of atonement or debasement is ever enough

Andrew H
Andrew H
1 year ago

” the post-war obsession with speed is directly related to Germans’ refusal to face up to the reality of what their country did to the world under Hitler, a leader, she says, they adored.” What utter rubbish. No country has done more to face up to its historic crimes than Germany, even placing a memorial to its own shame in the centre of its capital. And the FDP are hardly a tiny party.

JR Hartley
JR Hartley
1 year ago

Nonsense, really. Dieselgate was about cheating. But the other manufacturers achieve compliant NOx and particulate emissions with AdBlue and particulate filters. Remember, Euro6 trucks and busses are what have made the air in our Cities the cleanest it has been since the start of the Industrial Revolution.
But German (and indeed, any non-Chinese) automaker are right to fear the ridiculous mandatory EV push. All EVs contain computers, and power semiconductors, and rare-earth magnets and circuit boards all made in China, as the costs are still far below Western factories. Already a large slice of the other accessories aside from EV parts are made there. It is a short step for Chinese automakers to fill in the remaining morsels of the assembly, with bodyshells and interiors. So just like with our electronic devices, only expensive boutique items will not be made in China. Bye-Bye all of those auto-making factories in Europe!

Rob C
Rob C
1 year ago
Reply to  JR Hartley

You got me interested in looking at the state of Chinese auto production. They make over 20 million cars a year and are the second largest car exporter in the world. As for EVs, they are already the world’s largest producer .I have no reason to not believe they aren’t already making “bodyshells and interiors”.

Rob C
Rob C
1 year ago
Reply to  JR Hartley

You got me interested in looking at the state of Chinese auto production. They make over 20 million cars a year and are the second largest car exporter in the world. As for EVs, they are already the world’s largest producer .I have no reason to not believe they aren’t already making “bodyshells and interiors”.

JR Hartley
JR Hartley
1 year ago

Nonsense, really. Dieselgate was about cheating. But the other manufacturers achieve compliant NOx and particulate emissions with AdBlue and particulate filters. Remember, Euro6 trucks and busses are what have made the air in our Cities the cleanest it has been since the start of the Industrial Revolution.
But German (and indeed, any non-Chinese) automaker are right to fear the ridiculous mandatory EV push. All EVs contain computers, and power semiconductors, and rare-earth magnets and circuit boards all made in China, as the costs are still far below Western factories. Already a large slice of the other accessories aside from EV parts are made there. It is a short step for Chinese automakers to fill in the remaining morsels of the assembly, with bodyshells and interiors. So just like with our electronic devices, only expensive boutique items will not be made in China. Bye-Bye all of those auto-making factories in Europe!

Nathan Ngumi
Nathan Ngumi
1 year ago

A great piece, illuminates the difficult decisions ahead for internal combustion engine auto makers.

Nathan Ngumi
Nathan Ngumi
1 year ago

A great piece, illuminates the difficult decisions ahead for internal combustion engine auto makers.

Adam Grant
Adam Grant
1 year ago

There’s a potential market for “purist” EV’s here. Most manufacturers getting into EV’s for the first time are trying to maximize the value chain with automation and self-driving features. I’d like to see an EV that maximizes the driving experience, giving the driver more control over the vehicle. Spend the engine component savings (both cost and space) on suspension.