From Der Spiegel, March 27:
Electric cars are selling poorly, and many German manufacturers are still focusing on the combustion engine. The threat from cheaper Chinese competitors is growing. Might this be the death knell of Germany's fabled automobile industry?
They got an early start in Paderborn. Five years ago, when the range of electric cars available in Germany was still quite limited, Caritas banished many of the diesel- and gasoline-fueled cars from its fleet and purchased 114 electric cars and 45 e-bikes. In one fell swoop, the Catholic Church's charity organization became a pioneer in the fuel-loving republic.
At the time, the CEOs of Germany's major car companies were still busy complaining about a lack of charging stations. In no time at all, Caritas Paderborn had 118 of its own charging stations installed. "Sustainable on the road" is emblazoned in red letters on the white, polished Caritas cars that around 500 of the organization's caregivers use to drive to the people they assist.
It all looked like a success story: According to Caritas, operating costs fell by 40 percent because electricity was cheaper than gasoline and the electric cars had to be serviced less often. CO2 emissions from the vehicle fleet fell by around 190 tons per year.
But the situation has since changed. Officials at Caritas ran into a problem they weren't expecting: There aren't many electric cars around that the charity can afford, and leasing rates have risen sharply.
Early on, Caritas sometimes paid less than 60 euros per month per vehicle. But today, new contracts cost 200 euros, often even 300 euros. E-cars are becoming less and less of a cost-saver for the organization.
"We're hardly able to find what we are looking for from German manufacturers," says Hans-Werner Hüwel, head of nursing and healthcare for the charity. Caritas is now increasingly switching from VW or Smart to electric models from Renault or its budget brand Dacia. But even these are often more expensive to lease than comparable combustion engines.
Still, he says the charity organization will remain loyal to electric cars for "as long as we can afford it." But he also reports that Caritas chapters in other areas have begun switching their fleets back to combustion engines.
Frustration among electric car buyers is helping to fuel a combustion boom. And it's not just at Caritas that the shift to electric cars has stalled. The German federal government's central modernization project is in danger of failing. Not only is the German populace not playing along, but manufacturers haven't come up with attractive products and the political framework conditions still haven't been optimized. Electric car purchases remain the domain of those with healthier salaries.
No German manufacturer currently has an electric car on the market that costs less than 25,000 euros, and most prices are well over 30,000 euros. The e-up!, a compact bestseller for years, was taken off the market by Volkswagen in 2023 – allegedly because it was no longer profitable. VW has no plans to bring cheaper electric vehicles back onto the market until 2026. Meanwhile, Mercedes and its Chinese partner Geely keep adding extras to the E-Smart, making it more expensive.
In most cases, it costs several thousand euros more to buy an electric car than a comparable combustion engine.
Added to this is an economic environment that makes the change seem unattractive: recession, inflation and highly volatile electricity prices, which were among the highest in Europe in 2023. The German Association of the Automotive Industry (VDA) expects sales to fall by 14 percent this year.
They may frequently tout clean mobility, but politicians have actually contributed to the current mess with policies that have been all over the map. The federal government canceled its subsidies for electric car purchases of up to 4,500 euros in mid-December - a sudden decision that unsettled consumers and left car manufacturers stunned.
At the same time, a 200-million-euro subsidy program that had only been announced in June and was intended to promote the private charging points known as wallboxes, in addition to the related solar systems and electricity storage units, was also cancelled. In one fell swoop, consumers who wanted to buy the expensive technology were left to fend for themselves.
In addition to the losing their possible financial attraction, the back and forth within the current German government has also taken a toll on the popularity of electric cars. German Transport Minister Volker Wissing of the business-friendly Free Democratic Party (FDP) is still flirting with synthetic fuels as an alternative to electric cars, as if the pace of the global car industry is set in Berlin and not in China and the United States, where Germany's naval gazing is of no interest to anyone.
What the German government is doing better than anything else is to confuse German car buyers more and more when it comes to deciding on an electric car. The consequence is that the German government's target of having 15 million electric cars on German roads by 2030 has faded into impossibility. So far, the figures are only a tenth of that.
This political disaster, though, has had economic consequences.
With manufacturers like VW struggling to get rid of their stocks of electric cars and new manufacturers entering the market at the same time, an unprecedented rebate battle raged at the beginning of the year. In the first quarter, retailers were offering discounts of 15 percent, 20 percent and sometimes even more. Those who already owned electric cars had to watch as the value of their vehicles melted away. Leasing has become less attractive because interest rates are high and electric vehicles are losing value faster than expected. Car rental companies such as Sixt are removing electric vehicles from their range in droves. The financial risk appears to be too high.
In Germany, the electric car is becoming a symbol of a shift to green technologies that has been botched by the state, just like the debate over the switch from gas heating to heat pumps that preceded it. The Alternative for Germany (AfD) party is waging a cultural war from the right against the electric car. Left-wing extremists, meanwhile, set fire on March 5 to an transmission tower just outside of Berlin, shutting down the Tesla plant there for several day. In a statement of responsibility, activists claimed the act was in protest against "techno-fascists" like Elon Musk.
At the same time, it is clear to almost every transport policymaker and auto industry executive in the world that the day of the electric car is coming – and fast. The question is whether Germany and its car manufacturers will be part of the transition and help shape it – or whether they will be bowled over by the change. No longer, it would seem, does Germany call the shots in the global automotive industry.
The pace and the technology are now determined by others. In China, the world's largest car market, almost a quarter of all new cars sold are all-electric vehicles. To survive in the country, you need competitive electric vehicles. The competition is no longer dominated by VW, BMW or Mercedes, but by Tesla from the United States and BYD from China. And the newcomers are no longer confining themselves to their home markets – they are also capturing market share in Germany and Europe.
Clinging to the old ways would be economic suicide. But the temptation is great to delay the death of the lucrative combustion engine for as long as possible. Mercedes-Benz boss Ola Källenius, who until recently wanted to go all-electric, is suddenly questioning the European Union's decision to phase out combustion engines by 2035. He says he doesn't know when the last gasoline or diesel car will be sold.
In Brussels, the shift to electric vehicles is apparently no longer a priority. European Commission President Ursula von der Leyen, once a staunch supporter of phasing out combustion engines, now considers it "very important" to review the issue in 2026. Manfred Weber, leader and group chairman of the European People's Party (EPP), the parliamentary group representing center-right Christian Democrat parties in the European Parliament, would like to "reverse" the ban on combustion engines. Germany's Christian Democratic Union party and its Bavarian sister party, the Christian Social Union, also want to make that demand part of their platforms for this spring's elections to the European Parliament....
