Business briefing: What the German election means for OEMs

Business briefing: What the German election means for OEMs

Also explicit in the coalition plan is an earlier introduction of the ban on new ICE car sales, a couple of years ahead of the European Union’s 2035 deadline, although that’s controversial with car makers and the supplier industry, manifesting as a rift at November’s COP26 climate conference in Glasgow.

Yet with dramatic targets being driven by The Greens and backed by the business-friendly Free Democrats, whose leader Volker Wissing has been handed the transport portfolio, Germany’s car industry leaders have remained largely silent – with the exception of Volkswagen Group boss Herbert Diess.

Diess made his move early, going viral on social media with a plan for the coalition, grabbing the green agenda and majoring on accelerating the transition to electrification.

Neither BMW nor Mercedes-Benz has been as bold as Volkswagen and gone public while the coalition formulates policy, but given that Germany is the European economy with the biggest automotive industry workforce – some 880,000, which is nearly four times the size of the next-biggest, France — the risk to the German economy is significant.

Continental, for example, has previously warned that an over-enthusiastic switch to electrification will threaten jobs, while Bosch has 15,000 workers in Germany alone dedicated to diesel component manufacture.

The counter argument says a decisive and rapid switch will pay back with a more competitive industry leading the global transition.

The question is how sensitive the coalition will be to the business and employment challenge of pivoting too early to a new manufacturing normal and damaging the German economy.

Early signs suggest not very sensitive, if their resistance to e-fuels is anything to go by. E-fuels, in which synthesised hydrogen is combined with carbon to create a synthetic hydrocarbon fuel, can clean up internal combustion engines and extend their production life to reduce disruption to manufacturers and suppliers. They also offer a hedging alternative to batteries, whose hungry appetite for destructive mining of rare metals might yet limit their widespread deployment.