Germany’s Electric Vehicle Transition
With the news that Volkswagen is cutting vehicle production by 30% of of ID.4 and ID.7 at their Emden plant in Germany, it is highlighting several issues the country’s automotive tradition is facing with the electric vehicle transition leading to the question – is Germany’s auto industry going to survive the electric vehicle (EV) transition?
Even with the economic recovery over the last two years, German car production is still at its lowest in more than three decades, and more than 1.5 million cars lower than just a few years ago.
Germany has been one of the leading countries in promoting electric mobility. With Volkswagen being one of the key players in the automotive industry, its recent announcement regarding the reduction in electric vehicle production at the Emden plant has come as a surprise to many.
Volkswagen has been gradually expanding its electric vehicle production capabilities with the Emden plant playing a crucial role in this expansion. However, the recent decision by the German automaker to decrease EV production at the Emden plant raises an important question: Why is Volkswagen reducing EV production?
One of the primary reasons for the reduction in EV production is the decline in electric vehicle sales in Germany. The German government recently cut subsidies for EV purchases, which has made EVs more expensive for consumers. In February 2023, the sales of fully-electric vehicles dropped by 13.2% as compared to January 2022. This decline in sales has impacted Volkswagen’s production plans and its overall strategy for electric mobility.
Volkswagen, however, remains optimistic about the future of EVs and is confident that capacity utilization at the Emden plant will increase again with the market launch of the ID.7 later this year. The ID.7 is another SUV that will be produced at the Emden plant, and it is expected to play a critical role in Volkswagen’s efforts to expand electric mobility across the globe.
Another factor that could have contributed to the reduction in EV production is the expansion of EV production capabilities at other Volkswagen facilities. The German automaker recently announced its plans to launch electric vehicle production at two new locations – Chattanooga, Tennessee, and Hanover, Germany. Volkswagen’s efforts to expand its EV production capabilities could have led to a realignment of production capacities at its existing facilities.
Despite the recent reduction in EV production, Volkswagen remains committed to its goal of becoming a leader in electric mobility. The German automaker has set a target of selling 1 million electric vehicles globally by 2025, which it plans to achieve through a combination of electric SUVs and other battery-powered vehicles.
Volkswagen’s decision to reduce electric vehicle production at the Emden plant is a clear indication of the challenges faced by the electric mobility industry. The decline in EV sales in Germany and the expansion of EV production capabilities at other locations are factors that have impacted Volkswagen’s production plans for electric vehicles. However, Volkswagen remains committed to its goal of becoming a leader in electric mobility and is confident in the future of electric vehicles. With the launch of the ID.7 later this year, it remains to be seen if Volkswagen’s production capacity at the Emden plant will increase, as the German automaker hopes.
Tesla’s Record Deliveries Continue Dominance Over German Automakers
The electric car market is heating up, and Tesla is managing to surge ahead while German automaker Volkswagen reports unexpected low sales. Tesla, the dominant electric car manufacturer, has managed to maintain its market-leading position despite the current economic downturn caused by the COVID-19 pandemic.
Tesla (TSLA) surpassed expectations with its second quarter production and delivery figures on Sunday. The effects of price cuts and federal EV tax credits contributed to increased sales for the electric-vehicle manufacturer.
In the quarter, Tesla achieved a global production of 479,700 units and delivered 466,140. These numbers exceeded Wall Street consensus estimates of 448,599 units and the previous quarter’s total of 422,875. It’s worth noting that both production and delivery figures for the second quarter set new all-time records for Tesla.
As for BMW and Mercedes…Tesla has been eating BMW’s and Mercedes’ lunch in the luxury segment. Tesla is the first local automaker to head the prestigious luxury vehicles sales ranking in the US in 25 years. According to Autonews estimates, Tesla has shipped 491,000 premium luxury cars last year, i.e. vehicles above certain price threshold, beating the usual BMW, Mercedes, Lexus, Audi, or Cadillac suspects to the punch. (Q1 2023 figures):
- Tesla: 491,000
- BMW: 332,388
- Mercedes-Benz: 286,764
Tesla has been providing exciting features that set it apart from its competitors, such as sophisticated autopilot systems, an expansive charging network, and energy-efficient battery technology.
Additionally, Tesla has also won customer loyalty through excellent customer service. Tesla owners are not just customers but also brand advocates. The company takes the time to interact with customers and listen to their feedback, which has helped them develop electric cars that respond to the needs of their consumers.
On the other hand, Volkswagen’s electric car production efforts have been met with resistance from customers. Volkswagen recently made headlines with its announcement of cuts to electric car production due to lower-than-expected sales. A spokesperson for the company highlighted that “strong customer reluctance” led to these far lower sales than anticipated. Although Volkswagen has been manufacturing electric cars for almost ten years, it has not managed to stay competitive in the marketplace. The German automaker has been struggling to shift away from traditional gas car manufacturing and establish itself as a formidable player in the electric vehicle space.
Another factor contributing to Tesla’s success is the investments that the company continues to receive. Recently, Tesla’s market value crossed $800 billion, solidifying it as the world’s most valuable car manufacturer. This investment has enabled the company to increase production and build new models. Additionally, Tesla has been able to sell electric cars at a lower cost, making the technology more accessible to consumers. This is a significant factor in its success, as many are hesitant to invest in electric cars due to their higher price point.
China is Taking Over the German Auto Market
The Rise of Chinese-made Electric Vehicles in Germany
The market share of electric cars shipped to Germany from China more than tripled in the first quarter, the German statistics office said on Friday, a worrying sign for German carmakers struggling to keep up with their fast-moving Chinese peers. From January to March, 28.2% of passenger cars with electric motors imported into Germany came from China, compared with 7.8% in the same quarter the previous year, the office said.
One reason for the growth of Chinese-made electric vehicles is their competitive pricing. Chinese manufacturers have been able to produce electric vehicles at a much lower cost compared to German and other European automakers. This gives buyers more options when it comes to purchasing affordable electric vehicles. Additionally, Chinese automakers have been increasing their investments in research and development, leading to better technology and electric batteries that are proving more efficient and durable than their European counterparts.
Another reason behind the upward trajectory of Chinese-made electric vehicles in Germany is the support they receive from the Chinese government. China has been investing heavily to promote the use of electric vehicles, providing subsidies to consumers, and allocating billions to develop infrastructure for charging stations. This has created a conducive environment for Chinese companies to produce and export electric vehicles while encouraging the growth of the industry as a whole.
Furthermore, Chinese automakers are targeting emerging markets early and setting up shop where demand is high. Emerging markets often have a growing middle class that seeks affordable electric vehicles. By focusing on these markets, Chinese automakers have positioned themselves to gain market share early, especially in places like Europe, where consumers are increasingly looking for green options.
Finally, the COVID-19 pandemic has played a role in the increased demand for Chinese-made electric vehicles. With many countries still struggling to contain the spread of the virus, consumers are shifting away from public transportation in favor of owning their own vehicle. Chinese manufacturers have seized this opportunity to increase their presence in the German market by exporting electric vehicles that are affordable and practical.
Meanwhile in China, German car makers have only a total ~4% share in the EV market in China among top producers.
The growth of Chinese electric vehicles in Germany signals a shift in the global automotive industry as key players struggle to adjust to the rise of electric vehicles. The recent development also emphasizes the need for innovation and investments in research and development in order to remain competitive. Although German automakers must work hard to keep up with their Chinese competitors, the industry as a whole is poised for a bright future with the promise of affordable, efficient, and eco-friendly transportation. The trend is set to continue with Chinese automakers targeting other European markets with their popular electric vehicles.
Germany’s Electric Vehicle Failures Electrify America and Volkswagen Vehicle Software Problems
The world is continuously pushing for solutions that will help in resolving problems related to climate change, sustainability and other global issues that produce negative impact on our planet. Governments all over the world are introducing laws and regulations that encourage people and manufacturers to be eco-friendly and to reduce their carbon footprint. Electric vehicles (EVs) have emerged as the solution for this and countries are investing heavily to adopt it. However, Germany’s electric vehicle failures have resulted in the need to shift the focus to efficient software systems, and it is not only VW facing these problems.
Electric Vehicle (EV) sales in Germany have declined, largely due to the country’s slow progress in developing charging infrastructure. The number of public charging points in cities is still inadequate, even for the 200 kilometer range car models. People are willing to buy electric cars, but they need confidence in the infrastructure, and that is only possible when they have plenty of charging points. On the other hand, America has a more developed charging infrastructure and is currently the main EV market in the world, with over 1.5 million EVs sold in 2020. This is six times more than the number of electric cars sold in Germany in the same period.
Although Volkswagen Group is one of the leading car manufacturers in the world, it has faced a big challenge with its electric vehicle software. Reports state that the software problems have caused many setbacks in launching the company’s id series of electric cars. Customers have complained of the incomplete installation of the infotainment systems and the fact that the charging process is known to cut off before the battery is fully charged. Investors have also raised concerns, especially in light of the company’s ambitious plans to roll out millions of electric vehicles worldwide.
With all the current EV manufacturing problems faced by companies like Volkswagen, the need for improving the software systems is paramount. If software companies are not innovative enough to provide the best and most efficient software for electric vehicles, then it would be almost impossible to produce efficient electric cars. The software systems need to keep pace with new technologies and for Volkswagen to offer value for money for its electric car customers, it needs to integrate technology that has clearly been tested and vetted.
Another cause for Germany’s electric vehicle failures is the limited availability of resources that are needed for technology development; manufacturers need a robust underlying infrastructure to make EVs that are affordable and perform optimally. The materials required; such as the batteries and the components powering the EVs are needed to be readily available to manufacturers. Many of these components are often imported from abroad, and the rate at which they are supplied to manufacturers has an impact on their performance.
In summary, Germany’s electric vehicle failures are a warning that there is still a further need to develop infrastructures across the country. These are not only to meet customer demand, but to encourage manufacturers to develop more electric vehicles as the electric car market remains in an embryonic stage of development. As the world is pushing for a more sustainable future, it is evident that there is much work to be done. Manufacturers need to invest in the right technology and use reliable software systems that can help power electric vehicles effectively. The time for change is now and the sooner manufacturers address these issues, the quicker we get to halting the negative global footprint of traditional fossil-fuel powered vehicles.
