European automotive industry threatened by German deals with China

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Photo WIkipedia Together with the United States and Japan, Europe was one of the largest exporters in the automotive industry in the world, but the entry of Chinese vehicles, which are gaining popularity among consumers, may cause the Union to lose this title soon. In other words, vehicle imports will surpass their exports. According to a study by Pricewaterhouse Coopers (PwC – a global network dedicated to management consulting), at the current pace of transformation, this may already take place in 2025.

Europe is losing leadership

For decades, the strength of European exports, especially in the automotive industry, has been seen as a guarantee of prosperity on the continent. However, manufacturers are currently struggling with extremely strong competition from China, and brands such as NIO, Lynk & Co and BYD are undermining Europe’s position as a leader in the automotive industry. The EU industry is under increasing pressure, and experts are sounding the alarm that the problems in the automotive industry have serious consequences for the economy. According to PwC, “China is becoming a major exporter of electric cars and their zero-emission BEVs are increasingly being chosen by Europeans. Moreover, both European and American manufacturers are increasingly shifting production of these vehicles to China, ”the report reads. Last year, Chinese car makers exported only 35,000 to Europe. BEVs; this year it will probably be 66 thousand. It is estimated that over the next three years European consumers will buy around 800,000. cars manufactured in China, of which about 330 thousand. will come from European car companies that have opened their factories in the Middle Kingdom. “At such a pace, excess imports of over 221,000 vehicles to Europe (internal combustion and electric) may already take place in 2025.” PwC experts remind that in 2015 Europe had an export surplus of 1.7 million vehicles. According to Jörn Neuhausen, head of the electromobility department at PwC Strategy Deutschland, Europe – as a location for the automotive industry, is under pressure from several sides: “In addition to disrupted supply chains, producers in Europe are particularly concerned about rising energy prices.” There is also an active industrial policy in the US and elsewhere to promote specific industries and locate supply chains. Not to mention the fact that Europe does not produce many truly competitive electric cars that can compete with the Chinese. European manufacturers face hard-to-solve delivery problems and rely heavily on expensive BEV models. In turn, Chinese manufacturers are introducing cheap electric models to Europe with new technology and new concepts. “As a result, we can see that no European model ranks among the top 5 best-selling electric cars in the world,” says Felix Kuhnert, PwC automotive expert. In particular, German car makers increased their market share in China to 4.1%. in the first three quarters of this year. Even at home, German producers are feeling increasing competition from the Chinese: “Although they have played a minor role in Europe so far, by 2030 they can get around 5% of the share price. share in the European BEV market, ”Kuhnert predicts.

Germany repeats its mistakes?

The publication of this PwC report coincided with the official visit to China by German Chancellor Olaf Scholz, accompanied by BMW and Volkswagen executives. After three years of China’s isolationist policy, Scholz was the first Western head of government to travel to Beijing with a business delegation. China is Germany’s largest trading partner, and the German economy is investing heavily in the Middle Kingdom. In September, the chemical company BASF opened a large production facility in Zhanjiang, southern China. The German car industry has also increased its investments there. Despite criticism from the West and the geopolitical tensions in the region, the German economy continues to increase its involvement in China. For example, as much as 40 percent. all cars produced by Volkswagen are sold in Xi Jinpinga’s country. After the UN condemned the human rights violations and forced labor in Xinjiang, Volkswagen refused to close its factory in the region. Last week, Reuter announced that Volkswagen was planning a major joint venture with the Chinese technology company Horizon Robotics. According to the report, more than EUR 2 billion will be invested. Another controversial contract – with the Chinese state-owned company Cosco – caused a stir even in Germany itself. The shipping company wanted to take over 35 percent. shares in the container terminal in the port of Hamburg considered to be critical infrastructure. Chancellor Scholz, the former mayor of Hamburg, pushed through a deal that was to meet the expectations of the Chinese company despite government resistance. Ultimately, Cosco received 24 percent. of the cake, without being able to influence the decisions of this main port in Germany. Is Germany making the same mistakes with China as with Russia by becoming overly dependent economically on another country that flouts international law? After all, the Chinese head of state and party leader Xi Jinping once again reaffirmed his policy towards Taiwan at the recently concluded 20th CCP Congress: “Unification must be achieved and will be achieved,” he told some 2,300 delegates. “A war for Taiwan would put the two greatest powers in the world – the US and China against each other in a region that is even more important to the global economy than Eastern Europe,” says Bernhard Bartsch of MERICS, a Chinese research institute based in Berlin. This would affect many sectors of the German economy. China has almost a monopoly in the rare earths and metals market. Of the thirty raw materials that the EU classifies as “critical”, 19 come mainly from China and are necessary for the production of electric motors, but also mobile phones, LED lamps, solar cells and computer chips. Germany’s energy transformation is largely dependent on supplies from China. Despite these geopolitical threats and human rights violations in China, Germany is expanding its economic relationship with the country. It is not only the Green party (to which the German government’s minister of foreign affairs and the German government’s minister of economy belong) that is demanding that these dependencies be reduced, so as not to be blackmailed one day, as is currently the case with Russia. Even the Federal Intelligence Service is alerting that Germany is already in “painful dependence” on China.

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