Germany Has a (Car) Problem. And With Them All of Europe.

Summary

The German car industry faces its biggest challenge since the invention of the internal combustion engine, with a 20% decline in production and a loss to electric car competitors. The industry's slow start in electric mobility and past focus on diesel engines put it at risk, as global trends shift towards electric vehicles. The impact of this downturn could be felt across Europe, affecting not only Germany's economy but also countries within its supply chain.

Takeaways

• 🚗 The German car industry is facing its greatest challenge since the invention of the internal combustion engine, with a significant decline in production compared to 2019.
• 📉 German automakers like Volkswagen, Audi, BMW, and Mercedes-Benz are losing ground to foreign electric car manufacturers, particularly in the Chinese market.
• 🔋 German carmakers have been slow to adapt to the electric vehicle (EV) market, initially focusing on diesel engines and missing the early stages of the electric race.
• 💡 The US and other countries, including China, have been investing heavily in electric mobility, with China leading in lithium-ion battery production, a critical component for EVs.
• 🌏 The Paris Agreement and global climate policies have spurred the development of electric mobility, with Germany lagging behind in this transition.
• 🛑 The 'Dieselgate' scandal significantly impacted the German car industry, resulting in billions of dollars in compensation and a loss of reputation and sales.
• 🏭 Competitors have been building the necessary infrastructure for electromobility, including large battery factories, while German companies have been slower to respond.
• 💼 The German government has launched an electric mobility program to expand charging networks and subsidize EV purchases, but the industry is still playing catch-up.
• 🏢 The automotive industry is a major driver of the German economy, accounting for nearly 5% of GDP and a significant portion of employment and exports.
• 🌐 The potential decline of the German car industry could have far-reaching effects on the European economy, particularly in countries with a strong automotive presence.
• 🚀 Despite the challenges, German automakers have committed to investing €250 billion in research and development by 2027 to innovate and compete in the new automotive landscape.

Q & A

What did Gabor Steingart predict about the German car industry in Focus magazine in July 2023?

Gabor Steingart predicted that the German car industry, and by extension Germany as a whole, is on the verge of collapse due to the greatest challenge since the invention of the internal combustion engine.

What significant observation did Handelsblatt confirm about the German automotive industry in July 2023?

Handelsblatt confirmed that Germany's flagship automotive brands produced more than half a million fewer cars in the first half of 2023 compared to the same period in 2019, indicating a nearly 20% decline.

Why is the German automotive industry losing ground to competitors in the electric vehicle market?

The German automotive industry is losing ground because it has been slow to adapt to the electric vehicle market, with competitors like Tesla and Chinese manufacturers making significant inroads and investments in electric vehicle technology and infrastructure.

What impact did the 'Dieselgate' scandal have on the German car industry?

The 'Dieselgate' scandal, where German car manufacturers were found to have used software to falsify emissions measurements, led to a loss of trust, a significant financial penalty, and a tarnished image for the industry.

How did the US administration under President Barack Obama influence the electric car industry?

The US administration under President Barack Obama had a significant influence by providing $2.4 billion in subsidies to manufacturers, mainly Tesla, and $1.5 billion to companies developing more efficient lithium-ion batteries, thereby promoting the electric car industry.

What role did the Paris Agreement play in the development of electric mobility?

The Paris Agreement, ratified by 195 countries, pledged to pursue policies limiting the global average temperature increase to less than 2°C, which included the development of electric mobility as part of the fight against carbon emissions.

Why did German carmakers initially refuse to embrace the electric car trend?

German carmakers initially refused to embrace the electric car trend because they were focused on perfecting diesel engines, which they believed would better adapt to tightening emission limits, and they were slow to recognize the potential of electric vehicles.

What is the significance of the battery manufacturing industry for electric vehicles?

Battery manufacturing is crucial for electric vehicles as batteries are the most important component without which the vehicles cannot operate. The dominance of Asian companies in this sector has given them an advantage in the electric vehicle market.

What steps has the German government taken to promote electric mobility?

The German government has allocated large sums of money to expand the network of charging points for electric cars and to subsidize customers who want to buy electric vehicles, aiming to support the growth of this sector.

How has the Volkswagen Group's investment in battery factories been perceived as a response to the electric vehicle market?

Volkswagen Group's investment in six large battery factories has been seen as a significant step to catch up with the competition in the electric vehicle market, but it is also viewed with skepticism due to the decade-long delay compared to competitors.

What are the broader economic implications of the German car industry's struggles for Europe?

The struggles of the German car industry could have far-reaching implications for Europe, as the industry is a key economic driver not only in Germany but also in countries like the Czech Republic, Slovakia, Hungary, Poland, and Spain, where German car brands have a significant presence.

Outlines

00:00

🚗 German Automotive Industry's Struggle

The script discusses the challenges faced by the German car industry, as stated by Gabor Steingart and confirmed by Handelsblatt. The industry has seen a significant decline in production, with flagship brands like Volkswagen, Audi, BMW, and Mercedes-Benz producing nearly 20% fewer cars in the first half of 2023 compared to 2019. German automakers are losing ground to foreign electric car manufacturers, particularly in the Chinese market. The script also highlights the impact of the 'Dieselgate' scandal and the subsequent financial and reputational losses for companies like Volkswagen. It suggests that German carmakers may have missed the early opportunities in the electric vehicle market due to their focus on diesel engines and their slow response to the global shift towards electric mobility.

05:03

🔋 The Race for Electric Mobility

This paragraph delves into the global shift towards electric vehicles (EVs) and the role of the US, China, and other European countries in this transition. It mentions the US government's support for electric mobility under President Obama, which included subsidies for manufacturers and battery technology development. The script contrasts this with the German car industry's initial reluctance to embrace electric vehicles, choosing instead to focus on diesel engines. The 'Dieselgate' scandal is again referenced, highlighting the repercussions for Volkswagen and the industry's slow start in the electric vehicle market. The paragraph also discusses the dominance of Asian companies in the production of lithium-ion batteries, a critical component for EVs, and the lack of German representation in this sector.

10:05

🌏 Global Impact of German Automotive Challenges

The script outlines the broader implications of the German automotive industry's struggles for the European economy. It emphasizes the industry's significant contribution to Germany's GDP and employment, as well as its role as a major export product. The narrative extends to other European countries like the Czech Republic, Slovakia, Hungary, Poland, and Spain, where the automotive industry, heavily influenced by German companies, is a crucial part of their economies. The potential collapse of the German car industry could have a ripple effect, impacting these countries' economies and employment. The script also touches on the current economic recession in Germany and its potential to escalate into a broader crisis, affecting political stability and the eurozone's balance.

15:06

🛠️ Revitalizing the German Automotive Industry

The final paragraph discusses the German automotive industry's response to the challenges it faces. It mentions a €250 billion investment plan by German carmakers and suppliers in research and development of new technologies by 2027. This investment is aimed at creating innovative cars and batteries to compete in the electric vehicle market. The script suggests that this could be a turning point for the industry, but it also raises the question of whether it is too late to catch up with competitors like Tesla, Chinese manufacturers, and others. The future of the German automotive industry is presented as a critical factor for the economic and political stability of Germany and Europe.

Keywords

💡German car industry

The German car industry is the backbone of the country's economy, known for its innovation and manufacturing excellence. It is central to the video's theme as it faces significant challenges due to the shift towards electric vehicles. The script mentions that this industry is 'facing its greatest challenge since the invention of the internal combustion engine' and discusses its decline in production and competition with electric car manufacturers.

💡Internal combustion engine

An internal combustion engine is a type of engine where the combustion of fuel occurs with an oxidizer in a confined space, creating high-pressure gas to produce mechanical work. The script refers to this as the previous pinnacle of automotive technology, highlighting the historic shift the industry is undergoing with the advent of electric vehicles.

💡Electric vehicles (EVs)

Electric vehicles are vehicles that use electric motors and batteries for propulsion instead of internal combustion engines. The script emphasizes the rise of EVs as a major disruptor in the automotive industry, with German manufacturers struggling to compete against foreign EV manufacturers like Tesla and BYD.

💡Dieselgate

Dieselgate refers to the scandal where Volkswagen was caught using software to cheat on emissions tests, falsely presenting their diesel cars as environmentally friendly. The script uses this term to illustrate the German car industry's previous focus on diesel engines and the repercussions of their dishonest practices.

💡Elon Musk

Elon Musk is the CEO of Tesla, Inc., and a significant figure in the advancement of electric vehicles. The script mentions him as a pioneer who saw the potential of electric cars early on and has become a major competitor to traditional German car manufacturers.

💡Charging points

Charging points are the infrastructure necessary for electric vehicles to recharge their batteries. The script discusses the German government's initiative to expand the network of charging points as part of their strategy to promote electric mobility and support the automotive industry's transition.

💡Lithium-ion batteries

Lithium-ion batteries are a type of rechargeable battery that is commonly used for powering electric vehicles due to their high energy density and longevity. The script points out that the production of these batteries is dominated by Asian companies, highlighting a missed opportunity for German manufacturers in the EV supply chain.

💡Emission limits

Emission limits are regulatory standards set to control the amount of pollutants that can be released into the atmosphere by vehicles. The script discusses how German carmakers initially focused on diesel engines to meet these tightening limits, which later proved to be a strategic misstep as the industry shifted towards electric vehicles.

💡Investment in R&D

Investment in research and development refers to the funds allocated towards creating new technologies and improving existing ones. The script mentions a €250 billion investment by German carmakers and suppliers in new technologies by 2027, indicating a significant commitment to catch up in the electric vehicle race.

💡Economic recession

An economic recession is a period of temporary economic decline during which trade and industrial activity are reduced. The script notes that the German economy is in its third quarter of recession, which adds to the urgency and importance of the automotive industry's adaptation to new market conditions.

💡Eurozone

The Eurozone refers to the group of European Union countries that have adopted the euro as their currency. The script suggests that the economic health of Germany, a key member of the Eurozone, is crucial for the stability of the entire economic bloc, especially in the context of southern European countries' debt issues.

Highlights

Gabor Steingart warns of the potential collapse of the German car industry and Germany itself in Focus magazine.

Handelsblatt confirms the challenges faced by the German automotive industry, noting a 20% decline in car production in the first half of 2023 compared to 2019.

German automakers are losing ground to foreign electric car manufacturers in the competitive market.

Volkswagen had to cut production and costs due to a lack of clients, while Mercedes faces challenges in the Chinese market.

Audi struggles to develop its own e-platform for electric vehicles, seeking Chinese cooperation.

Tesla sold over 20,000 electric cars in Germany in the first quarter of 2023, outpacing German brands.

German carmakers may have missed the early stages of the electric vehicle race and made strategic mistakes.

US President Barack Obama's administration played a significant role in promoting electric vehicles with subsidies and support for battery development.

The Paris Agreement of 2015 spurred the development of electric mobility to combat carbon emissions.

German carmakers initially focused on diesel engines, missing the shift towards electric vehicles.

The 'Dieselgate' scandal in 2015 revealed Volkswagen's use of software to falsify emissions measurements, leading to significant financial and reputational damage.

US President Donald Trump targeted the German car industry for retaliation, further impacting Volkswagen.

Asian companies, particularly Chinese, have been successful in supplying lithium-ion batteries, a critical component for electric vehicles.

The German government launched an electric mobility program to expand charging infrastructure and subsidize electric car purchases.

Elon Musk's Tesla has been successful in building a factory in Germany and capturing the market.

Chinese electric car manufacturers, like BYD, are outselling German brands in the electric vehicle market.

The automotive industry is a significant driver of the German economy, accounting for 4.7% of GDP and employing 900,000 people directly.

German car exports brought in €245 billion in 2022, making them the country's most important export product.

The economic health of Germany is crucial for the stability of the eurozone, as it balances the weaker southern European economies.

The German car industry announced a €250 billion investment in research and development of new technologies by 2027 to compete with global rivals.

Transcripts

"The German car industry will collapse, Germany  will collapse. At least Germany as we have known  

it so far" announced Gabor Steingart on the  pages of Focus magazine on July 15, 2023.

The former editor-in-chief of the Handelsblatt  newspaper and then its publisher has sounded  

the alarm. In his assessment: "the German  automotive industry is facing its greatest  

challenge since the invention of  the internal combustion engine."

A week later, on July 21, the Handelsblatt itself  published an extensive analysis confirming the  

observations of its former boss. It says that  Germany has something to worry about. In the  

first half of 2023, the flagship brands of the  local automotive industry: Volkswagen, Audi,  

BMW and Mercedes-Benz, produced more than half  a million fewer cars than in the same period  

four years earlier - in 2019. This represents  a decline of almost 20 per cent overall. To  

make matters worse, German automakers are giving  ground to competitors where the future is being  

forged. It's losing to foreign electric car  manufacturers, and it's losing at every turn.

It's too early to talk about disaster,  

but the German automotive industry is on  a curve it hasn't experienced in decades.  

If it doesn't emerge victorious from this  bind, the effects will be felt not only by  

the entire German economy but also by all  of Europe. Welcome to the Twenties Report.

Due to a lack of clients, Volkswagen had to cut  production and cut costs this summer. Mercedes'  

luxury electric cars, meanwhile, are losing  out in the Chinese market, the most critical  

market for the Stuttgart-based giant. Audi, on  the other hand, is unable to develop its own  

e-platform, designed for the new generation  of electric vehicles. It invites, therefore,  

Chinese companies to cooperate. At the same time,  Tesla is elbowing its way into the German market.

In the first quarter of 2023,  Elon Musk's company sold more than  

20,000 electric cars to customers  in Germany. Germans choose them  

almost twice as often as battery-powered  models from Volkswagen, Audi, or Mercedes.

This is where the question arises. How  can Germany, one of the world's largest  

and perhaps most qualified car manufacturers,  slowly slip down the hierarchy of car suppliers?

It seems that German carmakers slept through  the early stages of the electric race,  

and once they were in it,  they made cardinal mistakes,  

often due to their own arrogance.  So let's trace how this happened.

"Tesla will be the first US automaker to go  public since the Ford Motor Company held its  

IPO in 1956." - announced in February  2010 Elon Musk. Adding further that his  

company will become a milestone in the  resurgence of the electric car idea,  

which until recently had been  rejected by most car companies.

Despite the sceptics, Musk turned out to be  right. Although it should be remembered that  

a major influence on his success had the US  administration of President Barack Obama. In  

early 2011, the US president promised voters  in his State of the Union address that there  

will be one million electric cars on American  roads in four years' time. To achieve this,  

he gave $2.4 billion in subsidies to  manufacturers (mainly Musk) and $1.5  

billion to companies developing designs  for more efficient lithium-ion batteries.

Soon, other European countries and China followed  the US lead, and work on improving electric cars  

took off. This dovetailed perfectly with the  principles of the global climate agreement  

concluded under the auspices of the UN in Paris on  12 December 2015. It has so far been ratified by  

195 countries, the only major country not to have  done so being Iran. The signatories have pledged  

to pursue policies that will limit the increase in  the global average temperature to less than 2°C.  

The development of electric mobility in highly  developed countries was seen as part of the  

fight against carbon emissions. This, in turn,  meant diverting huge sums of money to this end.

Meanwhile, up until the Paris Agreement,  German carmakers stubbornly refused to see  

the new trend. They stuck to the strategy they  had adopted at the beginning of the 21st century,  

saying that the future lies in  even more perfect diesel engines.

During the long reign of Angela Merkel, as the  European Union successively tightened emission  

limits for carbon monoxide, hydrocarbons  and nitrogen oxides for passenger cars,  

it seemed that diesel engines would be the engines  better able to adapt to the new requirements than  

petrol ones. However, the industry had reached  a point where it was no longer technologically  

possible to reduce emissions further. At the  time, German companies, led by Volkswagen,  

preferred to focus all their efforts on hiding  the facts rather than admitting they were wrong.  

The nearly 10 million cars sold not only under  the Volkswagen brand but also under the Skoda,  

SEAT and Audi were fitted with software designed  to falsify emissions measurements. The clever  

program detected that the car was being tested  and immediately switched the diesel engine to  

low-emission mode. Thanks to the software, the  new cars complied with the strictest standards,  

but only at diagnostic stations. During everyday  driving, such low emissions proved impossible.

The scam, later dubbed "Dieselgate", came to  light in 2015. In September of that year, the US  

Environmental Protection Agency (EPA) discovered  what was going on. Unfortunately for the Germans,  

Donald Trump, who took over the US a year and a  half later, made the German car industry one of  

his targets. He sought retaliation, believing  that Germany played unfairly with America and  

its companies. This directly cost the Volkswagen  Group more than $25 billion, which it had to pay  

into a compensation fund to deal with the claims  of defrauded customers. On top of this came losses  

in image and sales. Thanks to the continued  support of Angela Merkel's government, the  

company was able to weather the storm. However,  this did not prevent another type of loss.

Far more in tune with the spirit of  the new age, car companies from the US,  

China, Japan and South Korea were investing  huge sums in the development of electric or  

hybrid cars at a time when German companies  were stubbornly perfecting the diesel engine.  

Competitors were also building the facilities  necessary for the electromobility revolution,  

led by huge electric battery factories.  In this area, especially Asians have been  

very successful. In 2022, more than 70  per cent of all lithium-ion batteries  

in the world were supplied by Chinese,  South Korean and Japanese companies.  

The Chinese conglomerate CATL leads the pack  with a 35 per cent market share. In second  

place is South Korea's LG Energy Solution with  almost 16%. BYD comes in third with 11 per cent.

Among the big manufacturers of this most  important component of any electric car,  

without which it won't hit the road,  you won't see any company from Germany.

When Chancellor Angela Merkel negotiated  a settlement with the Americans to protect  

German companies from the consequences of  "dieselgate", she also launched a domestic  

electric mobility programme. The government in  Berlin allocated large sums of money to expand  

the network of charging points for electric cars  and to subsidise customers who wanted to buy a  

car with such a drive. It was electric cars that  were to save a key sector of the German economy.

The peak moment of optimism came in  early November 2019. At that time,  

the Chancellor and her ministers held a summit  meeting at the Chancellery with the heads of  

German automotive companies, trade unions and  the Association of the Automotive Industry (VDA).  

Later it was announced that there would be no  turning back, and that by 2030 there would be  

one million electric vehicle charging points  for many millions of such cars in Germany.

The problem is that the competition still had a  10-year head start. Elon Musk had the audacity  

to build a huge Tesla factory in Grünheide, near  Berlin. And it turned out to be his success story.

But it seems that a bigger threat to the  Germans than the Americans is the Chinese.  

Looking only at sales of electric cars: the  BYD corporation in 2022 sold a total of 911  

000 units. And counting hybrid cars, more  than 1.8 million, recording an increase  

in sales over the previous year of the  size of a whopping 211%! Tesla in 2022,  

sold as many as 1.3 million electric cars,  and recorded a year-on-year increase of 40%.

Meanwhile, Germany's largest manufacturer,  the Volkswagen Group, which includes the Audi,  

Porsche, Skoda, SEAT and of course, Volkswagen  brands, among others, sold 572 000 electric  

cars in 2022. Noting a 10 per cent increase in  electric car sales. And yet, in addition to BYD,  

other Chinese manufacturers, led by BAIC and  Zotye, are also catching wind in their sails.

Overall, in the Middle Kingdom, a  key market for German companies,  

through preferences and subsidies, more  than 20 per cent of newly purchased cars  

are electric cars. And in the vast majority,  Chinese electric cars. As presented, the sales  

figures of top German brands occupy places  only in the second ten of Chinese rankings.

The devil, as usual, is in the details. Electric  cars need neither a gearbox nor a clutch nor  

the whole complicated system of a diesel or  petrol engine - thus the finest works of German  

technical thought. Instead of these, batteries are  essential. In this way, German automotive loses  

its greatest assets. Now it belongs to others -  the Americans and the Asians, mainly the Chinese.

Admittedly, it was the European Union  institutions, with very strong German  

lobbying, that passed a directive  banning the registration of new  

passenger cars with internal combustion  engines on the old continent from 2035.  

Contrary to Berlin's earlier expectations,  however, it may turn out that it is not  

the German carmakers that will benefit  most, but the American and Asian ones.

Last year, Volkswagen CEO Herbert Diess announced  a massive investment in constructing six large  

battery factories. But a decade's delay  will not be easy to make up. If this feat  

is not achieved, we could be witnessing  the twilight of the German car industry,  

and perhaps even, as Steingart  claims, "the end of Germany as  

we know it”. But does it really so much  depend on just one industry in Germany?

Let's start with the fact that the automotive  industry has been the main driver of the German  

economy for several decades. Its importance  has only grown since 1990. Thirty years ago,  

the automotive industry in unified  Germany was responsible for 3 per  

cent of Germany's annual GDP; today,  it accounts for about 4.7 per cent,  

and indirectly as much as 7.5 per cent of  GDP if you include the automotive suppliers.

In no other of the world's most developed  economies is the automotive industry as  

crucial as in Germany. In the US, Japan and South  Korea, the share of the automotive industry in  

key economic indicators such as GDP and  export earnings is significantly lower.

In Germany, car factories provided  jobs for 750,000 people in 1992. Today,  

the figure is around 900,000, and including  subcontractors, it is as high as 1.7 million.  

At the same time, German cars, which  still enjoy an excellent reputation,  

are Germany's most important export product. More  than 65 per cent of them go to foreign markets.  

In 2022, their sale brought Germany  export revenues of EUR 245 billion.

This figure may not seem so impressive  when you consider that Germany's total  

exports in 2022 were worth 1.58  trillion euros. What is more,  

despite all the international turmoil, they  grew by as much as 14 per cent year on year,  

making Germany the world's third-largest  exporter after the United States and China.

However, no other sector of their economy  can match the automotive industry in terms  

of foreign trade. Even the machinery  and chemicals industries lag behind.

This interconnectedness means that when the  German car industry has a runny nose, the whole of  

Germany feels the chill and then falls ill. What's  more, the malaise threatens not only Germany.

In the case of the Czech Republic, where  the Volkswagen Group has owned the Skoda  

plant in Mladá Boleslav since 1991, the  automotive industry employs some 120,000  

people in a country with a population of  around 10 million. While sales of cars and  

their components abroad account for up to 20  per cent of Czechia's total export earnings.

The economy's dependence on the car industry  is even more pronounced in Slovakia. This  

country of just 5.4 million people has  become one big car assembly plant. The  

car industry employs about 170,000 people  and accounts for about 30 per cent of export  

earnings. Until 2006, Slovakia had only  one manufacturer, Volkswagen Slovakia,  

with a plant in Bratislava. Investors from other  countries then came in, but diversification  

does not mean the economy is immune to a  possible collapse of German car companies.

Nevertheless, it is Hungary with 9.7  million populace, that is potentially  

in the worst situation. Mercedes has its  car factory in Kecskemét, Audi in Győr,  

and BMW is finishing a plant near Debrecen.  Hungary's car industry already accounts for 18  

per cent of the country's export earnings. And it  is almost entirely dominated by German companies.

On this map of threats, it is still worth  remembering Poland, as around 25% of the  

cars produced in the country are German brands.  The investments like Volkswagen’s in Poznan and  

Polkowice, or by Mercedes in Jawor, are of  great importance for the western regions of  

the country. The situation is similar in Spain,  where Seat, which belongs to the Volkswagen Group,  

is of great importance for Barcelona  and the entire region of Catalonia.

In addition to the final plants that crown the  entire production process, there are thousands of  

subcontractors that are directly or indirectly  involved in the entire German supply chain.

So it is easy to see that if the German  car industry's cold does not go away but  

becomes a chronic illness, not only  Germany but also the Czech Republic,  

Slovakia and Hungary will be seriously affected.  Poland and Spain could also be badly hit.

The whole issue is also worth considering  in a slightly broader and different context.

It is worth remembering that the German  economy is now in its third quarter  

of recession. According to a report  by the International Monetary Fund,  

of the G7 countries, Germany is the only one  to have recorded consecutive declines in GDP.

And there are no signs that a turnaround is  imminent. The PMI, which tracks developments  

in the manufacturing sector, is breaking  depressed records in Germany month after  

month. While 50 points indicate a neutral  level, it fell to 38.8 points in July 2023.

In short, pessimism has taken hold between the  Oder and the Rhine, and the alarming news from  

the car industry is only adding to it. The  recession threatens to turn into a crisis,  

and an economic crisis could turn into a  political one. The first symptom of this  

is the rapidly growing support for the AfD  party - Alternative fur Deutschland. Some  

22 per cent of those surveyed are already  planning to vote for the far-right party,  

which has so far remained on the fringes of  political life. In the polls, the AfD has  

overtaken the SPD - the Social Democrats and the  Greens, and only the CDU/CSU is still ahead of it.

Since the middle of the last century,  the foundations of German democracy  

have been economic prosperity and social  security. When there are fears that both  

foundations are beginning to crumble, there is  nervousness and a search for - alternatives.

Germany's economic health and predictability  also underpin the eurozone as a whole. Especially  

when Greece, Italy and Spain - all ‘euro  countries’ are heavily indebted. Until now,  

the economic strength of the North has  balanced the weakness of the South. If  

this balance is lost, the whole  structure will begin to totter.

Awareness of this problem seems to be  growing in Berlin. In mid-May, following  

a meeting under the auspices of the German  Association of the Automotive Industry (VDA),  

carmakers and their suppliers announced that  they would invest a staggering €250 billion in  

research and development of new technologies  by 2027. Spending almost twice as much as,  

for example, Poland's annual budget income is  expected to result in the birth of innovative  

cars and batteries far better than  any currently available on the market.

So the Germans have taken up the challenge posed  to them by Musk, the Chinese, the Japanese,  

or the Koreans. But is it a little too late? We  will find out only when we see the next stages  

of the race, the future of which is at stake  not only for Germany but for all of Europe.