Are the German car makers ready for the Chinese rEVolution?
It looked like a great initiative by the German Bundestag in June 2021. They introduced ammendments to the Energy Industry Act ( EnWG ) and the Energy Consumption Labeling Act ( EnVKG ) to mandate that gas service stations should display a poster showing consumption, the € cost / 100km for different types of fuel, for private motor vehicles.
They seem to have calculated things reasonably well, using WLTP data for the top selling cars. I can see that the electric cost is roughly right if someone only used public chargers. (Of course many will often charge at home on a night rate, so it is 1/3 of that cost or better.)
I was happy to see a government introduce a programme to share such useful information with motorist. It obviously helps them to understand the benefits of buying an EV and the significant reduction in fuel cost, as well as the lack of emissions. It seemed like a very progressive move, especially in a country with a significant car industry.
I was happy, until a family member in Germany pointed out that the posters would only go at filling stations with more than 6 multi-product pumps. That would pretty much limit it to the very big services alongside the Autobahn highways, and exclude the majority of smaller, local service stations.
Why would they do that? Bring out a progressive information campaign, and then completely cripple it.
Then I thought about that significant car industry…
On the outside, the German car companies appear to have embraced electric vehicles (EVs). VW especially are selling them like hot cakes, with their id.3 and id.4 cars being very popular. But you still hear of stories about dealers pushing people away from them. Surely the dealers should be incentived to sell the new models?
The internal combustion engine (ICE) manufacturers have a lot of sunk investment in making petrol and diesel cars and it is difficult to slow that down. Meanwhile, Tesla and Chinese EV manufacturers have no or low sunk investment in ICE so can just crack on with making and selling EVs. A few of them are already selling in Europe and others will enter the market over the next couple of years and put pressure on European makers. A lot of current EVs are SUV-style and are relatively expensive up-front to buy, but the Chinese will also bring a range of small EVs at very affordable price points.
In Norway, where ICE sales will be banned in 2025, EVs already make up over 50% of the market. With many other countries in Europe and around the world also banning ICEs by 2030, there is a ready market for those Chinese sellers to target.
From a business point of view, it would seem to make sense for the German car companies to do whatever they can to slow the EV market. Do they encourage their retailers to push the EV-curious into ICE cars? Did they lobby the German government to restrict publication of useful consumption information?
These are not unusual tactics for organisations who wish to protect their market. I am sure that the oil industry could also have being involved in that lobbying. The oil industry doesn’t really have a choice as oil is their entire business and it is difficult to switch away from it. They must protect what they have.
The car manufacturers do have other choices. They can push even harder to turn their ship around and move to total EV production. If they don’t, they might find that their business will be taken by the new manufacturers.
The Chinese rEVolution is coming!