The Tesla Shock

BERLIN (Own report) – Decisive sectors of the German elite are holding onto diesel technology, causing the automobile industry to fall significantly behind its foreign competitors, according to US and British observers, who see the German automobile industry soon confronting a “Tesla shock.” Whereas, the demand for US electric automobiles is rapidly growing, in the long run, the demand for German diesel models is significantly sinking. In fact, the German government has been shielding German companies from innovation pressure, by imposing their interests, even abroad. Berlin has not only applied the brakes to the introduction of the EU’s CO2 emission limits, but also to China’s setting electric automobile quotas, to reduce pollutant emissions. In the current diesel scandal, Berlin continues to maintain its policy course.

“Witch hunt against the Automobile”

The recent series of scandals (diesel scandal, accusation of cartel formation) which have strongly damaged the international image of Germany’s automobile industry have become a topic of dispute in the government coalition during the hot phase of the German parliamentary election campaign. When, in an interview, Chancellor Angela Merkel cautiously spoke in favor of the automobile industry abandoning the combustion engine, she was sharply attacked by her CSU coalition partner. Unlike the British and French governments, Merkel, in spite of her timid criticism, did not want to set a binding exit time frame for this climate-damaging technology, explicitly declaring that she “could not yet name a precise year.” However, CSU Chairman Horst Seehofer immediately declared that, for his party, maintaining the diesel would be a prerequisite for forming a future coalition government.[1] Prohibiting the combustion engine would “strike at the roots of our prosperity,” Seehofer claimed. In the discussion of the diesel scandal, Germany is about to “completely loose its head” and start a “witch hunt against the automobile, itself.”

Protecting the Industry

The German government appears to continue its policy, aimed simply at imposing the automobile industry’s interests at the domestic and international levels. German car producers’ manipulation of diesel vehicles’ emissions data, which has led to the first prison sentences for VW employees,[2] will have no serious consequences in Germany for those responsible. This had become evident, when the government made no mention of possible sanctions or serious constraints for the car companies, at a crisis summit in Berlin between the German government and executives of the automobile industry. They merely agreed to “optimize” the diesel vehicles’ pollutant emissions by updating their software. The automobile industry has been able to prevent bans on diesels or even diesel recall obligations. With its passivity, the German government is “protecting” the car manufacturers, according to media commentaries.[3]

China Under Pressure

Over the past few years, Berlin has become particularly active, when the German auto industry’s direct interests were endangered. The most recent example was in China in late spring 2017, when German pressure compelled the political leadership of the world’s largest car market to postpone the planned 2018 introduction of a quota for electrical vehicles.[4] Chancellor Merkel had been able to “persuade” China’s Primier Li Keqiang, to postpone, for a year, the introduction of the obligation on all car manufacturers in the People’s Republic of China that a quota of 8 percent of their cars must be electric powered. This measure, with which Beijing sought to reduce greenhouse gas emissions, has now been postponed until 2019, because the German car producers on the Chinese market were unable to meet the quota – which was scheduled to be increased to 12 percent by 2020. Since the European Union – particularly the euro zone – is an important market for Chinese products, Berlin had sufficient leverage to impose the delay. Merkel said that she wanted to be sure that German carmakers would continue to enjoy good conditions in China. The media is interpreting China’s electric car quota as an attack on the German auto industry, to undercut its strong position on the Chinese market.

“Alliance Against CO2 Limits”

Germany’s Key Sector

The automobile industry assumes a key position in Germany’s export-oriented economic strategy, which aims at the highest possible export surpluses. In 2012, automobile manufacturers generated around 17.3 percent of Germany’s exports, thereby, accounting for around two-thirds of its trade surpluses.[7]

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A New iPhone Moment

Full article: The Tesla Shock (German Foreign Policy)

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