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BackBlack-Red-Green Alliance: Car countries are demanding more support from the federal government and the EU
Black-Red-Green Alliance: Car countries are demanding more support from the federal government and the EU
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Spiegel Wirtschaft55 minutes agoBusiness2 min readGermanyView original

Black-Red-Green Alliance: Car countries are demanding more support from the federal government and the EU

The Prime Ministers of Baden-Württemberg, Lower Saxony and Bavaria are calling for joint action to save the German automotive industry.

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  • Prime Ministers Cem Özdemir, Olaf Lies and Markus Söder are calling for a package of measures from the federal government and the EU to strengthen the German auto industry.
  • They warn of job losses and call for fair trade, deregulation and investment in battery technology.

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Why It Matters

The German automotive industry is under pressure from technological change and international competition, especially from China. According to the Prime Minister, around 52,000 jobs will be lost in 2025.

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The prime ministers of the automotive states of Lower Saxony, Baden-Württemberg and Bavaria are calling on the federal government and the EU to act quickly to avert a decline in the German automotive industry. The fact that the politicians from the SPD, CSU and Greens wrote a joint paper shows how serious they are.

“Without the combination of competitive framework conditions in the domestic market, effective protective instruments and fair trade within the framework of the WTO, the automotive industry is at risk of irreversible damage,” warn Cem Özdemir (Baden-Württemberg), Olaf Lies (Lower Saxony) and Markus Söder (Bavaria).

The trio points out that the automotive industry and its suppliers are the backbone of German industry. Among other things, fair trading conditions with China are insisted on. The EU Commission's anti-subsidy investigations must be quickly expanded to include Chinese hybrid cars - the example is the tariffs on Chinese electric cars.

The three also complain that the federal government is acting too slowly and warn that around 52,000 jobs will have been lost in 2025 alone. The federal government is called upon to keep labor costs stable by making the social security systems future-proof. The energy costs for the economy would have to continue to fall, for example in terms of network fees and electricity taxes.

The Prime Ministers also make demands on the European Union. It should allow a broader application of the reduced industrial electricity price and electricity price compensation. Autonomous driving must be allowed and the charging infrastructure for electric cars must be further expanded. There should also be incentives to buy not only new electric cars, but also used cars.

The EU is also calling for massive deregulation and a relaxation of European state aid law. The paper says that it must also be possible to promote the development of new technologies in the previously strong automotive regions.

"In particular, powerful and ecologically sustainable battery technology is central to the mobility of the future and thus to Germany as a business location." The three prime ministers warn of an ever-increasing dependence on countries like China for components and batteries, which make up a significant part of the added value of electric cars.

The EU must also make its fleet limits more flexible and limit the CO₂ reduction targets for 2035 to a flat rate of 90 percent and without compensation. In addition, the use of renewable fuels and steel produced without CO₂ must be taken into account. Manufacturers need the necessary leeway and no fines. A particular challenge is described as the fact that although China is clearly committed to e-mobility, the USA and other parts of the world will stick to combustion engines for a longer period of time.

The prime ministers are also pushing for “clear, uniform and practical local content and ‘Made with Europe’ rules to ensure European added value.” This regulation should also include close Western partner countries and not just the EU.

Open Questions

  • How will the EU respond to calls to extend tariffs?
  • What specific measures will the federal government take to reduce costs?

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This article was originally published by Spiegel Wirtschaft.

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