DüsseldorfThe pace of electromobility is increasing rapidly. For four million electric vehicles sold worldwide, the automakers have still needed the past seven years. For the next million, just six months will be needed. The overall market for batteries used in e-cars is becoming cautious industry estimates about tenfold in the next 30 years – from a few million in sales to about 500 billion euros.
The automotive industry is facing the biggest upheaval in its history worldwide. In the three most important automotive markets in the world (North America, China, Europe), all vehicle manufacturers work equally on the “car of tomorrow” – and in the midst of all this are the three German companies Daimler, BMW and Volkswagen, Today still celebrated globally as a technology leader for the entire industry.
If a new technology could prevail in the car, then it was mainly the German manufacturers who made the breakthrough with their premium models. ABS and driver assistance systems are the best examples of this.
The characteristics of the “car of tomorrow” are quickly outlined. It will definitely be electrified in some form – either partial or complete. The classic internal combustion engines (gasoline, diesel) will lose importance from year to year.
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Alone, new limit values for carbon dioxide emissions are responsible for this, which will be further intensified almost everywhere in the world during the next decades. Added to this is an increasing digitization of automobiles, including autonomous driving. This is accompanied by a fundamental change in the industry. In addition to the classic car manufacturers are other providers added.
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“The entry thresholds for new players have fallen due to new technologies and business models. Automobile start-ups or mobility providers succeed in their innovations in a short space of time, in the phalanx of the major automotive groups to rise, “says Stefan Bratzel, Professor at the Center of Automotive Management (CAM) in Bergisch Gladbach near Cologne.
Most of these companies originated outside Europe: Uber in the United States or Didi Chuxing in China. There are also IT companies like Apple and Alphabet, which are also pushing into the car business.
The switch to electromobility is happening faster than digitization. Just look at the German car manufacturers. By 2022 wants Daimler for example electrify the entire Mercedes portfolio, In every Mercedes series there will be at least one electrified model. Of these more than 130 electrified vehicles, more than ten models will be pure electric cars – in all segments, from the small two-seater Smart to the big SUV.
The Daimler Group has announced that ten billion euros will be invested in the expansion of the Mercedes electric fleet over the next few years. Another billion goes into a global battery production network. The money will be used to build six battery factories on three continents.
It looks similar BMW in Munich, the second major German manufacturer of premium vehicles. By the year 2025, the people of Munich want offer at least twelve fully electrified models, Together with the range of plug-in hybrids whose range BMW wants to significantly increase in 2019, the offer will then include at least 25 electrified models. A key role is played by China, where the Munich-based manufacturer plans to invest around three billion euros in production in the near future.
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at Volkswagen it goes in the same direction. The world’s largest car manufacturer from Wolfsburg The volume is just a little more extensive, In mid-November, the VW Supervisory Board decided that the Group will invest around 44 billion euros in the electrification and digitization of its vehicle fleet over the next five years.
The plants in Zwickau, Emden and Hanover will be completed in just a few years almost only electric cars produce, Approximately from 2023 on only in VW in Germany One million pure e-vehicles per year from the bands – with a total German car production of all manufacturers currently over five million.
The e-confession is meant seriously
The commitment of German car manufacturers to the electric car is meant seriously, even if at the moment a few battery-powered models are still on the road. From this year the street scene is expected to change slowly. “There will finally be a number of second-generation electric cars available, which domestic manufacturers have long announced as part of their e-offensive,” says Felix Kuhnert, Global Automotive Leader at the consulting firm PwC.
Since these vehicles would be brought on the market through strong sales organizations and well-known brands, this is likely give the electric new registrations a strong boost,
CAM Professor Bratzel is optimistic about electric mobility at BMW & Co. “When it comes to estimating the future of e-mobility, we are counting on catching up with German companies. In particular, the VW Group could greatly increase its innovative strength due to many models in the segment of pure electric vehicles, “emphasizes the university teacher. That also applies to Daimler; The Stuttgart group have also announced a number of new vehicles with a long range.
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However, the start into the electric age is likely to be difficult for German automakers for another reason. In the early days of electric vehicles, they earn significantly less with their new models than with a classic gasoline engine or diesel.
And this at a time when the economic high of the automotive industry is slowly coming to an end – so the industry as a whole earns less. In China, sales figures have plummeted due to the trade dispute with the US. In the United States has General Motors Already announced that several factories are closed and 15,000 workers lose their jobs.
Automobile profits have already fallen to the lowest level since the financial crisis of 2008/09. Like from one Investigation of the economic advice EY For the first time since 2009, car sales in the third quarter fell by 3.7 percent to 18.4 million vehicles in the third quarter. Operating earnings before interest and taxes (EBIT) fell by 3.3 percent between June and September, to 19.3 billion euros.
For the German automobile companies, the situation is currently difficult, explains EY partner Peter foot. “On the one hand, the aftermath of the diesel crisis, which has already cost the German auto companies more than 30 billion euros, brings further burdens”, he emphasizes. On the other hand, negative currency effects led to large losses in sales and profits. It remains to be seen how the trade dispute with the US will affect the balance sheets.
But it is not just the current problems that are giving German automobile manufacturers a headache. They can be celebrated because of their start now in electromobility. But digitization and autonomous driving are not progressing that fast. “Software is the raw material of the future,” says a high-ranking top manager at Volkswagen, explaining why digitization has become so important to the industry.
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But in this field, the entire German automotive industry lacks expertise, not only in Wolfsburg. Too late, the three manufacturers from Germany recognized the immense importance of IT and software in the coming years. It is undoubtedly clear that the cars of the future will be transformed into “smartphones on wheels”. “In digitization, the German manufacturers are years behind,” states the same VW manager.
The big competitors are in the US and in China. But it is less the classic competitors from the automotive business such as General Motors and Ford. A much bigger threat comes from companies that are now pushing into the automotive industry from outside. “In the future, new players from the digital and mobility world will increasingly compete with established automotive manufacturers with new business models,” says university lecturer Bratzel, describing the new situation.
But the profitability of new competitors like Didi, Apple and Alibaba already seems threatening. While established automakers like Toyota or Volkswagen have to settle for an annual operating profit of 15 to 20 billion euros, a company like Apple comes to almost three times the amount. Enormous sums of money that can be used to finance investments in the automotive business comparatively easily.
“Europe still has a long way to go, for example, to catch up with the US Ride-Hailing (Note: the mediation of private rides per app),” says automotive expert Chris McNally from investment firm Evercore ISI. Companies like Uber and Lyft had opened up a new market in a United States, in Europe so far not much to see.
Waymo is the world leader in autonomous driving
Although Europe is relatively populous, just five percent of all global ride-hailing rides would take place in this part of the world. America (25 percent) and Asia (70 percent) are the deciding factors.
The same applies to autonomous driving. Daimler, BMW and Volkswagen have started their first pilot projects, especially in the USA. But the new competitors have already made much progress with their projects. “The highest innovation strength has by far the alphabet daughter Waymo,” emphasizes Professor Bratzel. The mobility subsidiary of the Alphabet Group is something like the world market leader in self-driving cars.
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No other company has let automobiles drive millions of kilometers on their own – the decisive factor for gaining sufficient experience with the new technology. In December has Waymo in the USA started the first commercial service with self-driving taxis,
With the electrification and the digitization the established automaker encounters financial limits. “All at once, then probably not,” says an industry expert. The answer is: cooperations. The automakers have to team up and share about the development costs, such as for example Volkswagen and Ford are planning.
The US group could get the electric platform from Germany, in return, VW would participate in the Ford subsidiary for autonomous driving. Billions would be left in the till on both sides. “Stronger collaboration is the only logical answer,” says Arndt Ellinghorst, also of Evercore ISI.
There is no guarantee that German car manufacturers will be as successful as in the past 30 years. That is also clear to those responsible. “From today’s perspective, the chances might be 50:50 that the German automotive industry still belongs to the world top in ten years”, said VW CEO Herbert Diess already in October, However, the Germans are still not beaten. They will at all costs try to defend their top spot.