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The Electric Vehicle Revolution Comes for German Industry

While German carmakers pined for the golden era of the internal combustion engine, Chinese firms gained an almost insurmountable lead in electric vehicles. By forming joint ventures with Chinese EV and battery manufacturers, German companies could acquire the necessary know-how to remain globally competitive.

MUNICH – At September’s IAA auto show in Munich, German Chancellor Olaf Scholz appealed to domestic car manufacturers, urging them to welcome competition from Asia rather than trying to curb the influx of Chinese-made electric vehicles. No other country, he insisted, could match Germany’s automotive engineering expertise. But while Scholz’s assertion was certainly true in the golden era of the internal combustion engine, Germany lacks the expertise required to compete directly with Chinese manufacturers on EVs.

European automakers have been slow to embrace the EV revolution. Volkswagen, for example, faced setbacks in China during the COVID-19 pandemic. By the time China started to reopen, homegrown brands like BYD and Nio had doubled the number of electric models they offered. And most of these vehicles were not only cheaper, but also superior to Volkswagen’s offerings.

As German carmakers grapple with high energy prices in the wake of Russia’s energy embargo, Chinese carmakers are setting their sights on Europe. In a historic shift, 2022 marked the first year that Europe imported more cars from China than it exported to the country.