Automotive, the German efforts in China, queen of the electric sector – Corriere.it

In 2020, German automakers held 24% of the Chinese auto market; this year the share fell to 19%, underlined a recent analysis by the Merics think-tank. The decline is more than a wake-up call: a trend that can change the characteristics of German industry. And of the European one. that groups Volkswagen, BMW and Mercedes-Benz have bet heavily on their presence in the Chinese giant and, now that the situation has become difficult, they do not withdraw, on the contrary they raise and play their shirt. Not insignificant: the extended auto sector accounts for almost 10% of the German GDP, for 40% of the country’s R&D expenditure and employment of 800,000 people.

The effects of the crisis

A serious crisis in the sector could only reverberate on the rest of Europe, in particular on regions of Northern Italy, very integrated with the German economy. The Chinese market today is the heart of electric cars (Ev), the most developed: 55% of the new cars moved by a battery in the world travel on the roads of China. To be essential for us the German automotive industry: between 2015 and 2020, it increased its investments by 65%, to a total of 33.6 billion euros, notes Merics (Mercator Institute for China Studies in Berlin). Nonetheless, competition from Chinese producers and geopolitical tensions have created a very difficult environment. To say, the Volkswagen group had, in 2021, a total of 11.3% of the Chinese auto market but only 3.7% of Ev’s sales.

Among the top 12 electric car manufacturers in China by market share, ten are Chinese: the other two are a joint venture of General Motors and Tesla; there are no Germans. Volkswagen, BMW and Mercedes-Benz react by investing more, not retreating. Perhaps an obligation, but the risks are considerable: competition, Beijing government support for local businesses, patent theft and above all geopolitics. In recent days, Chancellor Olaf Scholz has been to China to support German companies. But if Beijing moves, particularly with the army, to bring Taiwan under its control, Western investments will be massacred by a Ukraine. Merics recalls that Renault sold 18% of its cars in Russia in 2021 and had to sell its assets for one ruble in 2022.