
Electric Cars Threaten the Heart of Germany’s Economy - matt2000
https://www.nytimes.com/2019/12/31/business/electric-cars-germany-economy.html
======
aaomidi
German automakers not only stopped their R&D to develop the next generation of
cars. They focused their R&D on figuring out the best way to cheat on
emissions testing
([https://en.wikipedia.org/wiki/Volkswagen_emissions_scandal](https://en.wikipedia.org/wiki/Volkswagen_emissions_scandal))

None of the German car manufacturers actually made any worthwhile EVs, and it
always seemed like they're making EVs just to satisfy EU lawmakers.

Meanwhile across the ocean, a company with essentially no production line
history is able to completely destroy century old companies because they got
complacent.

German car manufacturers deserve everything coming to them

~~~
ThePhysicist
I think that view is a bit simplistic. Tesla is catering to upperclass and
upper-middleclass people. 90 % of people in Germany either wouldn’t be able to
afford or wouldn’t be willing to pay 50.000 € (what the cheapest Tesla model
costs here) for a small sedan when they can get a Diesel car with similar
capabilities for 20.000 € or less. And honestly most people don’t care much
about emissions, they care about usability and ease of use, and there gasoline
cars are just much more convenient than electric cars right now. I have
several colleagues that drive Tesla and I find it a bit awkward that they have
to plan their hotels and schedule around the available charging infrastructure
even for small distances (e.g. for going from Berlin to Leipzig to attend
36c3). EVs would be awesome if the charging infrastructure was there but it
isn’t and it won’t be for several years to come.

~~~
faserop
Curious which German made Diesel cars costs 20.000 € or less. I get the
impression from Germans that EVs are not a good solution to replace diesel.
Perhaps there just isn't motivation of the populas behind the techonology.
Which could be blamed on the lack of infrastructure to support charging. Also
in the United States a lot of people have garages that they can install
charging stations in. I wonder what the percentage of Germans who have a
private garage is.

~~~
alacombe
Irrelevant of diesel, if you only need a city car, say alike the Citroen C1,
you can get a gas car with 600km range for about 12,000EUR. That 1.5x better
range for 20% of the price and 25% smaller on top of that. For the same
package, the Citroen C0 has about 20% of the range for twice the price.

~~~
petre
They're quite awful cars thpugh. I had a rental C3 Aircross in Portugal, it
wouldn't climb a moderately steep hill without pressing the pedal to the
metal.

------
growlist
The Germany car industry should have seen the writing on the wall a few years
back - when Merkel was forced to intervene to water down the European
Commission's proposed emissions regulations - and disrupted itself, and if it
had, it might have put them in a better position now. But even that would I
think have been just forestalling the inevitable: the barriers to entry to the
car industry seem to me to be lower than ever before, to the extent that even
Vietnam - somewhere that was previously considered a 'developing' country -
has its own home-grown electric car manufacturer, and I'm betting it's a lot
cheaper to make cars in Vietnam than it is in Germany.

~~~
bertjk
Turkey also: [https://www.engadget.com/2019/12/29/turkey-togg-electric-
cro...](https://www.engadget.com/2019/12/29/turkey-togg-electric-crossover-
suv/)

I'm starting to think that the most significant consequence of the mechanical
simplicity of electric cars is not the additional per-car reliability or
potentially lower TCO. It is that manufacturing cars has suddenly become
accessible to a much wider and geopolitically more diverse set of industrial
bases. Maybe electric cars will be the new textiles where developing economies
are concerned.

~~~
sho_hn
Both the Turkey EV (TOGG) and the Vietnamese EV (VinFast) are prototype cars
made by Pinafarina in Italy, I believe. They're not as fully homegrown as one
might think.

------
Brakenshire
There are a lot of cliche comments here about Dieselgate and German
manufacturers vs Tesla. The threat isn’t Tesla, Tesla will do very well but
isn’t going to take over the world, it’s that manufacturing EVs doesn’t need a
lot of the established supply chain, and doesn’t need the same level of
employment. Mercedes, VW, BMW etc will be fine, but a lot of their specialised
suppliers will go bust, and a lot of jobs will be lost.

~~~
weinzierl
I agree with everything you wrote and while I also believe that _" a lot of
their specialised suppliers will go bust"_ I think that at the same time there
are big opportunities for the suppliers and some will prosper.

The reason is that I believe electronics and software will become ever more
important. Traditionally the German manufacturers have outsourced anything to
do with software and even most of the electronics. They have no internal
knowledge about software what so ever - every bit of software know-how is at
the suppliers. That's why I think that at least _some_ of the suppliers will
be better off in the future than the manufacturers themselves.

And it is also a question of human resources. In the past and for a long time
software developers at German car manufacturers have been looked down on by
all the _" real engineers"_ who are in charge. As a software dev you have been
much better off at a supplier. This is changing but in my opinion it gives the
suppliers a good head start on capable staff for software projects.

~~~
ChuckNorris89
This. German auto makers are now just huge armies of managers and consultants
since they outsourced most tech/software R&D to suppliers (Bosch, Continental,
etc.) to reduce costs by having the suppliers take the financial risks
associated with R&D.

Outsourcing R&D was a typical MBA move since it meant they could keep a lot
more money in their pockets and have the suppliers bid each other to the
ground on price, however, this now means the suppliers have most of the
cutting edge tech now and are free to sell it to other lower tier
manufacturers which in the past had no resources for advanced tech.

So now you can have a Hyundai with the same tech as a Merc since they all have
the same Bosch/Continental ECUs with some minor tweaks meaning the main
selling point of the luxury brands is now the design, badge and perceived
brand value rather than any proprietary tech.

This is what drove the major suppliers to halt R&D investments in Germany and
expand massively in Eastern Europe in a quest to bring costs down and increase
their success in the bids for future contracts.

------
esotericn
So how about, in 2020, you make a car that's as good as the 2012 Model S?

It's absolutely bonkers that the car manufacturers are still playing catch up
to a car that's almost a decade old at this point.

Tesla are on their fifth model, third complete rework, and the 'traditional'
manufacturers still have their dick in hand.

Take a bog standard sedan, put a 200-300 mile range battery in it, sell it for
the battery cost more than the ICE version, scrap the ICE line before the
government forces you to, job done.

This is going to be the car industry's collective Kodak moment if they don't
pull out soon.

~~~
russdill
Add to that while battery prices and electric motor prices are dropping, the
price of developing and producing internal combustion engines continues to
rise due to stricter and stricter emission standards.

~~~
SEJeff
And the double whammy that those ICE manufacturers are having to purchase
carbon credits from EV manufacturers like Tesla.

[https://www.businessinsider.com/tesla-sold-carbon-
emissions-...](https://www.businessinsider.com/tesla-sold-carbon-emissions-
credits-to-general-motors-fiat-chryser-2019-6)

------
kfk
Meanwhile in Italy they are building lithium battery factories and working on
converting diesel buses to electric. The infrastructure shift will be huge and
new companies will need to raise to tackle that. For instance, Tourin has
circa 800 buses for public transport today - you cannot charge all of them at
the same time now as there is no infrastructure and not enough power in the
grid. I somehow think that if even Italy is embracing electric as the “next
thing” while Germany automakers still firmly hold their heads in the sand then
it could be a pretty bad blow for Germany in the coming decade. Amazingly
enough all of this could still be avoided if German automotive companies
accept for once that the world is changing, will they though.

* [http://www.rainews.it/dl/rainews/media/Vrooom-La-prima-fabbr...](http://www.rainews.it/dl/rainews/media/Vrooom-La-prima-fabbrica-italiana-di-batterie-a-celle-di-litio-d624b164-3f13-4997-8582-fb2341d9c3f9.html)

~~~
ulfw
You can't charge 800 buses in Torino but you can charge 8000 in Shenzhen?
What's wrong with the Italian grid if this is true?

~~~
mjpuser
I think one contributing factor slowing down progress is the cost of
electricity in Italy. It's €0.24/kwh vs $0.06/kwh in the US (at least in PA).
You dont see any electric cars in Italy, and it seems super expensive to them.
I’m also not sure if there is a tax on top of that €0.24 from what I remember
my cousin telling me. I’m hitting a language barrier confirming this.

~~~
mikeyouse
Much closer to $0.25 in San Francisco.. From my bill last month:

Generation charges: $22.33

Peak Usage: 62kWh @ $0.29672

Off-Peak Usage: 258kWh @ $0.28243

Baseline Credit: 246kWh @ -0.0832

Total usage: 320kWh @ $0.2160/kWh

~~~
SEJeff
My dad pays $0.08 / kWh for electricity in Kentucky. San Francisco has very
expensive electricity compared to much of the country. The average US electric
rate is $0.12 / kWh for reference.

~~~
danans
Kentucky is 75% coal powered, mostly using old existing coal plants.

As those plants age out of their usable lifetime, Kentucky utilities will have
to choose between some combination of renewables and storage or natural gas or
nuclear, all of which have higher costs than operating the defunct coal
plants, but lower capital costs than building new coal plants. This will
result in a rise in their prices over time.

Of course, comparing the future costs of new non-coal plants doesn't account
for the huge existing public health and environmental costs of burning coal
for electricity, which would be avoided by any of the other technologies.

~~~
SEJeff
Kentucky has been transitioning to natgas for some time now. The TVA shut down
three big coal plants and another big utility also shut down a big coal plant
last year. They’re not building new coal plants but natgas plants. That’s not
going to change the economics much.

I’m hoping Kentucky starts to do more solar as it is pretty decent for sun,
but the local politics likely think solar + stationary battery storage is some
lib-ruhl conspiracy.

------
jillesvangurp
Not just the German economy. Much of the traditional US and Japanese car (and
truck) industry is at risk too. Complacency leading to a lack of R&D is
enabling new comers to ship products and establish themselves. Toyota, Mazda,
BMW, Chrysler, etc. have in common that they don't seem to have plans to mass
produce EVs in a market where Tesla is taking the #1 position in several key
markets. It's not a given that any of them will survive while their market
shares crumble, typically starting with the most lucrative segments. The
supply industries around them are suffering a similar fate.

~~~
fernly
Somewhat relevant, "The Tesla Effect: How Tesla Is Changing the Used Car
Game"[1]. People who buy Teslas typically trade in high-end imports, causing a
drop in the used-car prices for Audis, Beemers, etc.

[1] [https://www.capitalone.com/cars/learn/finding-the-right-
car/...](https://www.capitalone.com/cars/learn/finding-the-right-car/the-
tesla-effect-how-tesla-is-changing-the-used-car-game/1096)

~~~
nradov
Used luxury cars have also become less reliable and more extensive to
maintain. The mechanical and especially the electrical parts have become more
complex and failure prone. Potential buyers understand that even a minor
problem out of warranty will cost thousands to repair, so I suspect that's
another factor in lower used car prices.

------
grecy
A lot of entrenched industries that make billions of dollars are being
challenged, and will almost certainly have to drastically change or outright
end if we have any hope of slowing climate change.

I suspect those earning billions are going to fight tooth and nail to do
everything in their power to stop that happening.

~~~
kneel
>I suspect those earning billions are going to fight tooth and nail to do
everything in their power to stop that happening.

The misinformation surrounding the leading manufacturer in EV for the last 2
years has been astounding.

~~~
Wohlf
What misinformation is surrounding Renault-Nissan?

~~~
Obi_Juan_Kenobi
Your snarky reply is several years out of date.

[https://insideevs.com/news/362674/global-ev-sales-in-
june-20...](https://insideevs.com/news/362674/global-ev-sales-in-june-2019/)

Nissan is far down, below Tesla, BYD, BAIC, SAIC, and BMW. And that's sales
number, not revenue, which favors Tesla even more strongly.

Tesla is, far and away, the global leader in BEVs.

------
BrandoElFollito
I would love to have an electric car but beside nearby trips (office, some
grocery) I also drive say twice a year for vacation.

I just checked the way from home (western suburb of Paris) to a ski resort
(Val Thorens)

2 x 40 min stops, on the same way as all of the region driving to ski with me.

This is simply impossible, I spend maybe 4 minutes at the pump, there are 10
of them at the station.

To have the equivalent in electric chargers, there should be 40 or 50 of them,
with a nuclear plant nearby to bring in the amperes.

By then if batteries are 3 times the capacity and 10 times the charging speed,
this will be competitive to fuel. Otherwise it stays as a second car solution,
for regional (local) trips

~~~
adrianN
You could rent an ICE car for your long trips. Depending on your regular usage
it could still be cheaper for you than paying for gas.

~~~
BrandoElFollito
I understand that. I was rather trying to point out hiw far, logistically, we
are from mainstream adoption - just because of life constraints (such as
vacation)

~~~
NullPrefix
Exactly the reason why pickups are so popular. You never know when you might
need to transport your washing machine or a fridge.

------
tonyedgecombe
Within Europe it's the UK that looks weakest right now. Domestic sales and
exports have both plummeted despite the pound dropping. The new trade deal
between Europe and Japan lessons the need for Japanese manufacturers to have
European plants. Honda have already announced they are leaving. Even the
prestige manufacturers are struggling.

~~~
peteretep
> Nearly six million vehicles are produced in Germany each year, and
> approximately 5.5 million are produced overseas by German brands

1.5m produced in the UK ... a large chunk of which are for German brands.

The UK automotive industry may be fucked, but the German one is 4 times
bigger, and also directly exposed to Brexit and weakness in the UK industry.

~~~
lispm
> 1.5m produced in the UK

Many of them made for exports - especially to the EU. This is the problem.
This will be less profitable and more complex. Currently Britain is in the EU
and seen as an entry to that market. This will be gone soon.

Much of that manufacturing looks to move to the EU.

------
epx
It was funny to see some colleagues that moved from here to Germany to work on
automotive industry, and almost overnight started to defend "stopgap"
alternatives like hydrogen ICEs... IMHO the biggest advantage of an electric
car is the 10x gain on mechanical simplicity, I don't care if it costs the
same to own and operate.

~~~
gambiting
Why would a regular customer care about mechanical simplicity at all? For 99%
of people the car is a magical black box where you put fuel in and drive it.
From time to time you need take it to a car doctor to replace something that
might as well be a quantum fusion exchanger diffuser for X amount of dollars
just so they can drive again. The last two values you say are of no importance
to you are of biggest importance to everyone else - the car can have literally
whatever under the bonnet, the cost to own and operate are the _only_ two
things that matter to anyone. There are certain idealists around for whom the
car not burning fuel is a thing worth paying more for, but most people only
ever look at the cost of ownership and nothing else.

~~~
CydeWeys
The customer will certainly notice low maintenance costs.

~~~
3fe9a03ccd14ca5
And replacement costs. How many people have had this discussion with a
mechanic?

“The engine will cost $4000 to repair or replace. The car is only worth about
$3000 so it’s better just to get a new car”

Engine replacements in cars are crap because all of the other bits and pieces
are still wearing out. Meanwhile a new batter makes an electric car like new.

~~~
WillPostForFood
A well maintained engine will last longer than a battery pack, and cost less
to replace (or rebuild).

~~~
SEJeff
But the overall maintenance is going to cost much more on a well maintained
engine.

Oil changes, fan belts, flywheels, spark plugs, alternators, starters, etc
don't exist in an EV. These are all components I have paid to have replaced in
an ICE I've owned. Additionally, if your EV has regenerative braking (such as
all Tesla vehicles), it is kind of like an ICE standard "engine braking"
resulting in recharging the battery. This results in a much longer lifetime
for brakes and brake pads.

My Model 3 requires scheduled maintenance every 2 years and they recommend a
tire rotation every 6,000 miles or so. Good luck finding that little
maintenance in a traditional ICE vehicle.

This is not the case for all EVs, but for Tesla, the battery is made up of
thousands of individual cells which are grouped into individual "packs". The
entire battery doesn't just go bad because the entire battery is thousands of
small batteries. Tesla now will replace an individual pack that might go bad,
making it cost less.

~~~
petre
Even if you throw away part of the energy the engine will work as a brake in
generator mode. Trains use this to limit speed down when descending.

~~~
SEJeff
Yes and manual transmission or commercial trucks use this to "engine brake".

------
sho_hn
Side note: Mercedes owned a 10% stake in Tesla early on and had an electric
B-class with a Tesla power train briefly.

------
eeZah7Ux
"threaten", as if it was a bad thing.

The world desperately need energy-efficient, sustainable public transport and
cities designed around it.

The electric car will not save us. Trains and bicycles might.

------
whatitdobooboo
It's hard to replace such a manufacturing oriented work culture in any
country, especially one revolving around cars in general. I think Germany will
be fine, it's still early.

------
99chrisbard
European EV cars don't compare to Tesla

[https://www.youtube.com/watch?v=zSjYra7cYqY](https://www.youtube.com/watch?v=zSjYra7cYqY)

------
Zigurd
Electric cars accelerated some trends already in motion: The simplicity of
electric cars dropped the last few barriers to *horizonalization." As with PCs
and smartphones, all players have access to all parts. Vertically integrated
players like Apple and Samsung retain some advantages, but are constantly
challenged at every horizontal layer by specialist suppliers.

There are about three dozen car manufacturers in China. They will thrive in a
horizontalized car business.

------
Vervious
The whole point of technology is to make processes more efficient. This in
turn drives down prices and increases productivity.

If it takes fewer people and factories to make a more sustainable vehicle, so
be it.

This is also the force that propels long-term economic growth (as long as the
political system continues to support it). To fight it, and make the auto-
industry less competitive, is good for Germany in the short run but the last
thing they should do in a long-term horizon.

------
jacquesm
Last I checked the German car industry was doing fine. Detroit however looks
more and more like a scene from some apocalyptic movie. And then there is
Japan.

~~~
Animats
Ford is going electric in a big way. Coming in 2020, the electric Mustang, for
which pre-orders are now full. Electric F-150 pickup in 2021.

"Ford says that they can produce 50,000 vehicles in the first 12 months" on
the Mustang. That's kind of small, but Ford can probably ramp that up as
needed.

Toyota is now making electric car noises but is only selling (or not-selling)
that hydrogen-powered thing.

~~~
jacquesm
Toyota is pretty much the market leader in hybrids and has been since the
beginning, if and when they decide to go all electric I really don't see what
would hold them back.

------
LoSboccacc
it's not electric cars that threatens German economy, it's delocalization to
cheaper countries.

worldwide sales are sustained thanks to strong growth in China that offset
other region contractions.

most brands have models ready to jump on the electric bandwagon anyway so the
brand themselves aren't really threatened.

it's just plain old greed

~~~
syncsynchalt
There are still two arguments to be made that electric vehicles themselves are
a threat to the German auto industry, independent of cost or where the
vehicles are made:

1) There are an order of magnitude fewer parts, due to replacement of the
engine with battery + motor. The part count of ICE engines was the reason we
have such a robust chain of suppliers, which are now threatened. There are
also jobs lost due to loss of assembly and integration work.

2) Several German (and Japanese) auto manufacturers rest on the reputation of
having the best engines in the business. Electric vehicles do not have
engines. The brand halo from their engine expertise doesn't transfer directly
to EVs.

~~~
Animats
The supply chain companies in Europe seem to be prepared. Continental has
parts for gas, electric, hybrid, and Diesel cars.

Continental announced parts for self-driving, offering flash LIDAR, ruggedized
computers, and actuators. But nobody got self-driving to production and
ordered a few hundred thousand of those units. Must be frustrating being too
early.

~~~
sbierwagen
[https://www.gwern.net/Timing](https://www.gwern.net/Timing)

>Why is their knowledge so useless? Why are success and failure so intertwined
in the tech industry? The right moment cannot be known exactly in advance, so
attempts to forecast will typically be off by years or worse. For many claims,
there is no way to invest in an idea except by going all in and launching a
company, resulting in extreme variance in outcomes, even when the idea is good
and the forecasts correct about the (eventual) outcome.

>Progress can happen and can be foreseen long before, but the details and
exact timing due to bottlenecks are too difficult to get right. Launching too
early means failure, but being conservative & launching later is just as bad
because regardless of forecasting, a good idea will draw overly-optimistic
researchers or entrepreneurs to it like moths to a flame: all get immolated
but the one with the dumb luck to kiss the flame at the perfect instant, who
then wins everything, at which point everyone can see that the optimal time is
past. All major success stories overshadow their long list of predecessors who
did the same thing, but got unlucky. So, ideas can be divided into the overly-
optimistic & likely doomed, or the fait accompli. On an individual level,
ideas are worthless because so many others have them too—‘multiple invention’
is the rule, and not the exception. Progress, then, depends on the
‘unreasonable man’.

------
_bxg1
> “There is a transition toward more electric vehicles that have far fewer
> components and are easier to manufacture,” Bernhard Mattes, the president of
> the German Association of the Automotive Industry, said in an interview in
> Berlin. “Therefore, we can expect less employment.”

Any major leap in efficiency eliminates jobs. It causes turbulence as people
have to shift jobs or even industries, but it's not really a reason to _not_
do something and it typically works out in the long run.

~~~
wffurr
In the short run you have a bunch of angry out of work voters who can throw a
monkey wrench into things.

Government and industry need to work together to provide a humane transition
for workers and regions dependent on the old way of doing things.

~~~
_bxg1
Agreed

------
known
German exports cars, cars and cars
[https://twitter.com/spectatorindex/status/113918565976628019...](https://twitter.com/spectatorindex/status/1139185659766280192)

------
neonate
[http://archive.md/qfoN9](http://archive.md/qfoN9)

------
jamwaffles
Won’t be any economy left if the planet is made uninhabitable. It’s like the
most sacred thing is profit, not anything about the people that create it.
Very odd train of thought.

~~~
growlist
Germany also shut its nuclear power stations in favour of more coal. I don't
trust Germany.

~~~
Already__Taken
Eh, nobody gets to make rational evidence based policy with nuclear, that ship
has sailed. I think once fusion is cracked the 50-years away joke will just
shift into the planning permission department.

~~~
pfdietz
"Once fusion is cracked" is almost on par with "once perpetual motion machines
are cracked." It presupposes that fusion being "cracked" is a reasonable thing
to expect.

~~~
martythemaniak
This is either a bad joke, an incredible misunderstanding of physics.
"perpetual motion machine" is not compatible with the laws of physics as we
understand them. There's many working fusion reactors, we don't know which, if
any, designs will be economical.

~~~
pfdietz
No, I understand that. What I'm pointing out is that if something has no
realistic chance of being economically viable, then from the end user's point
of view that's just as bad as if it were physically impossible. The only
difference is society is spending billions while pretending an economic
miracle will happen, even if that miracle is as implausible as discovery of a
violation of the law of conservation of energy.

~~~
imtringued
Well, it must be possible. If we can't build an artificial sun then we won't
be able to leave the solar system.

~~~
nl
That doesn't follow at all.

I think you meant to say "I hope we develop fusion so we can leave the solar
system".

