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German carmakers face mobility revolution

The triple megatrend challenge

New kids on the block: Apple, Google, Uber, Tesla

Strategies to cope听鈥� Lobbying to preserve the status quo

The diesel engine 鈥� carmakers鈥� 鈥渂oon and bane鈥�

Divided government lacks coherent strategy

A new dawn?

The outlook for German carmakers in a new mobility world 鈥� Culture wars

A question of money

Premium technical leadership

Mortal danger offers huge opportunity听

听

German carmakers face mobility revolution

If one product symbolises Germany鈥檚 post-Second World War rise to being an economic powerhouse, as well as its current export prowess, it is a luxury car made by Mercedes-Benz, BMW, Porsche, or Audi. Vehicles 鈥楳ade in Germany鈥� are considered hallmarks of reliability and quality across the world. The fate of the car industry in Germany - a nation which prides itself on having invented the automobile, and still resists speed limits on its Autobahns 鈥� is often seen as a barometer of the entire country鈥檚 economic health.

But the VW emission scandal 鈥� dubbed 鈥楧ieselgate' - has dealt a heavy blow to German carmakers鈥� claim to global technological leadership. The timing could not have been worse. Companies are facing a perfect storm created by the 鈥榤obility megatrends鈥� of electric engines, autopilot vehicles and carsharing.

鈥淚 wonder who would place a bet that the German car industry will emerge as a winner from the pending structural changes? Currently it is an open race and the carmakers are increasingly aware of what is at stake,鈥� says Christian Hochfeld, head of new mobility think tank Agora Verkehrswende*. He adds: 鈥淭he emissions scandal is a worst-case scenario for the global trust in carmakers 鈥� in the meantime not only limited to Germany.鈥�

The row has brought into sharp focus the question: 鈥淭o what extent are German carmakers still welded to the conventional engine?鈥� It remains a business model which earns the companies phenomenal profits - but faces extinction in the coming decades if the transport sector is to become fossil-free.

The Paris Climate Agreement leaves no room for doubt: Germany will have to cut its emissions to virtually zero in the coming decades in order to keep its commitment to fighting global warming. The cuts must take place in every sector, including transport - where emissions have remained largely constant for 25 years (the 威力彩玩法 dossier The energy transition and Germany鈥檚 transport sector gives an overview of the entire sector, whereas the present dossier focuses on passenger cars).

It is not surprising that Dieselgate has led to a growing chorus of warnings from industry insiders, mobility experts, and politicians alike, that many car managers have been asleep at the wheel and need to wake up to the challenges ahead.

But the crisis has also been a loud wake-up call for German auto manufacturers. BMW, Daimler and VW have now vowed to fight and defend their global leadership position against powerful new competitors such as Google, Apple, Tesla, and Uber.

Germany鈥檚 shift to a greener future 鈥� the Energiewende - has already wreaked havoc in the energy industry, where old utilities were too slow to adapt to rapidly rising renewable power generation. Companies such as E.ON and RWE put their own survival at stake by resisting change instead of embracing it.

The fate of the utilities should serve as a warning to carmakers as the Energiewende reaches the transport sector. Given the car sector鈥檚 enormous size, much more is at stake for the whole country.

The auto industry is a true giant of the German economy: Its 1,300 companies employ more than 800,000 people, . In terms of turnover, it is the largest manufacturing sector, clocking in sales of more than 400 billion euros in 2015.

The question looms large as to whether the iconic firms can continue to blossom in a future mobility world, which might be characterised by fleets of self-driving vehicles powered by electricity.

As Henning Kagermann, chairman of Germany鈥檚 National Platform Electric Mobility (), put it: 鈥淭he crucial question is no longer whether we enter a new mobility era, but what role Germany will play in it."

The triple megatrend challenge

Most mobility experts agree that three interrelated 鈥渕egatrends鈥� will transform the industry in the years ahead, each with worrying consequences for traditional carmakers: Stricter environmental regulations, autonomous driving technology, and the rise of the shared economy.

Firstly, stricter environmental regulations which will eventually force the industry to shift from the combustion engine to electric propulsion. The German the entire 鈥渢ransport sector is required to be effectively greenhouse gas neutral by the year 2050鈥�.

Carmakers鈥� traditional strengths, such as powerful combustion engines, gearboxes, and so forth, might well become worthless with the arrival of the electric engine.

鈥淔ar fewer parts are necessary for an electric engine. Combustion engines have become incredibly complex, but all of that won鈥檛 be necessary in the future,鈥� . 鈥淔ewer parts mean fewer people. The number of jobs could be reduced by a factor of five at least. That鈥檚 not only a question for the carmakers, but also for suppliers. Tens of thousands of jobs could be on the line.鈥�

The second megatrend is autonomous driving technology. This is likely to appear gradually in new car models. Opinions vary greatly among experts when these will eventually result in fully self-driving vehicles.

The innovation once more questions the future value of German carmakers鈥� traditional pride. Autonomous driving is likely to drastically cut the risk of accidents, according to experts 鈥� thereby reducing the need for huge car bodies and security features. In addition, self-driving cars will create huge amounts of data, making data management and IT connectivity more crucial. This is also not part of the companies鈥� classic strengths.

The eventual impact of self-driving vehicles is likely to go well beyond questions of technology. It looks set to reshape mobility lifestyles, as car travel time can be used for activities other than steering a vehicle, with potentially deep repercussions for the industry. 鈥淭his step will have an enormous impact on the question of what a car really is,鈥� said Nicolai M眉ller, who is an automobile expert and partner at business consultancy McKinsey. 听

The third megatrend is the rise of the shared economy and its impact on the transport sector. This is already underway, with shared car schemes springing up in cities all over the world.

These services might also herald big shifts in lifestyles, enabling a growing share of the population to make do without their own car. As a consequence, the car鈥檚 standing as a prestigious status symbol might be undermined further, potentially reducing the number of vehicles sold.

This triple challenge means that the industry is facing a 鈥渨atershed moment鈥�, . 鈥淚n the coming years, the automotive industry will face its biggest upheaval since before Henry Ford."

New kids on the block: Apple, Google, Uber, Tesla

The upheaval in the industry means that new players are enjoying a unique opportunity to conquer the massive market.

Firstly, newcomers suddenly stand a chance because electric cars are much easier to build. This threat is powerfully illustrated by the example of Tesla, whose e-car Model S outsold Daimler鈥檚 premium S-Class in the USA and many other markets in 2015.

The same is true for autonomous driving: 鈥淭he development of a self-driving car could enable a newcomer to leapfrog the first development stages, or get them from suppliers, and to disruptively change the competitive situation,鈥� according to . 鈥淎t the core is the question whether carmakers buy electric components or whether digital companies buy the cars.鈥�

Mobility expert Hochfeld even sees the possibility that a huge internet company like Google or Apple will build vehicles on their own, potentially degrading carmakers and their main partners to pure hardware suppliers, similar to the Chinese iPhone manufacturer Foxconn. 鈥淏ecoming the Foxconn of the car sector for Apple or someone else really would be a nightmare for the German carmakers."

The example of Uber shows that the trend of 听ride sharing 听- similarily to car sharing - creates an opportunity for yet another new class of powerful competitors, who don鈥檛 even deal in hardware. 鈥淚nvestors pour billions into the business model of an app that is basically only a new way to connect supply and demand. In terms of hardware, nothing changed,鈥� according to Hochfeld.

McKinsey鈥檚 M眉ller warns this development could spell serious trouble for German carmakers. 鈥淚magine the evolution of a shared mobility giant who orders huge numbers of cars 鈥� it would put a middle man between carmakers and their current end customers.鈥�

The mobility revolution creates new business areas which question concepts fundamental to traditional carmakers鈥� success, such as individual car ownership and car differentiation.

The industry was characterised in the past by incremental changes. But the transformations driven by the megatrends make disruptive changes more likely in the future. It remains unclear whether the trio of German carmakers will emerge victorious or as victims of the looming creative destruction.

The companies themselves insist they don't treat the challenge posed by the new players lightly. "We take all competitors very serious," VW spokesperson Tim Fronzek told the 威力彩玩法.听 听

But it is little wonder that politicians are growing increasingly concerned about the future of the carmakers.听

German transport minister Alexander Dobrindt warned: 鈥淕iven the development we are experiencing, we don鈥檛 know whether today鈥檚 top carmakers will also be the top producers in ten years鈥� time.鈥�

EU Commission vice president Maro拧 艩ef膷ovi膷 also urged the auto industry to 鈥渇inally get moving鈥�. 鈥淲ith the combustion engine, the European auto industry is top, but when it comes to alternative drives, it lacks behind,鈥� 艩ef膷ovi膷 told newspaper Die Welt.

Strategies to cope - Lobbying to preserve the status quo

One of the carmakers鈥� core strategies to cope with the new challenges was, at least until very recently, to resist change by shielding their traditional combustion engine business model, and attempting to extend its life-span for as long as possible.

For example, the companies successfully used their strong political influence to prevent stricter emissions limits at EU level in 2013. This meant they could continue to sell their main money-spinners, powerful combustion engines, as revealed by internal government papers .

鈥淚t often happened in the past that carmakers pursued a lobbying strategy. They said: 鈥楾he new targets are too ambitious, we won鈥檛 manage鈥� 鈥� only to delay them and to prove afterwards that it is technologically feasible,鈥� Peter Mock, Europe Managing Director from the International Council on Clean Transportation (ICCT), told the 威力彩玩法.

Ironically, they often cite the future challenges as a reason to continue their old ways 鈥� including in appeals to policymakers. 鈥淭he industry often argues that it must use the high margins of their premium segment with powerful engines to finance research and development for new propulsion technologies,鈥� says Hochfeld.

These pleas are echoed by some German politicians. Transport state secretary Rainer Bomba told an e-mobility conference: 鈥淗uge investments are needed for e-mobility, and that money will have to be earned with diesel and petrol engines. This is why they can鈥檛 be phased out now.鈥�

The trio of auto manufacturers have a lot to lose as their traditional business of selling conventional cars has been hugely successful.

within ten years to 92.1 billion euros in 2015, when it recorded a pre-tax profit of 9.2 billion euros. by 15 percent last year alone to 149.5 billion euros, while net profit jumped 19 percent to 8.7 billion euros. The five percent to 213 billion euros, but the Dieselgate scandal pushed the company into the red last year. In 2014, it booked a profit of 11.1 billion euros.

But Hochfeld warns that lobbying to preserve the status quo might be an own goal in the long term. 鈥淪uccessful lobbying by the car industry in Germany and Europe might be the largest obstacle to its pending transformation.

The diesel engine 鈥� carmakers鈥� 鈥渂oon and bane鈥�

Since the emissions scandal, the fate of the diesel engine has been a particular focus in the debate about the future of transport.

The car-making industry tends to stress that diesel engines have a better climate footprint than petrol motors, and that conventional engines in general still offer room for further emission reduction.

Matthias Wissmann, head of the German carmakers association VDA, said: 鈥淧etrol and diesel still have a significant potential. We expect to increase the efficiency of classic engines by at least 10 to 15 percent in the years ahead.鈥�

The industry is researching synthetic fuels that are 鈥減ractically climate neutral鈥�, he said, adding: 鈥淲ith fuels like these, diesel and petrol cars would have a long life expectancy.鈥�

But industry expert Bratzel this strategy does not promise success for long. 鈥淲ithout electrifying their fleet, carmakers won鈥檛 manage to comply with ever-stricter emission limits.鈥�

Mock says the reliance on diesel engines is a particularly troublesome problem for German carmakers because it has been so profitable. 鈥淚t is the boon and bane for the industry. It鈥檚 a typically German development, and earned the carmakers much success in the past. But now it becomes a problem because it won鈥檛 be cost effective for long to reduce emissions sufficiently.鈥�

Mock believes that 鈥渁 fundamental rethink is in progress鈥� at BMW, Daimler, and VW after Dieselgate. He adds: 鈥淭he scandal put things in motion and forced the carmakers to reconsider where this journey will lead. They now wonder whether the diesel is still a future-proof technology, and whether it is worth investing more money to develop a new generation of engines, or whether the money might be better spent elsewhere. This is currently the big question."

The auto manufacturers stress that conventional engines will remain an important business pillar for a long time to come because of their global reach. "Even if sales of alternative engines slowly gather pace in regions like China, the US, and Europe, there will be other regions where conventional engines will be needed for different reasons," says VW's Fronzek.

Daimler spokesperson Madeleine Herdlitschka agrees: "It will be impossible to electrify everything overnight. There are many different markets, and not everyone will move as fast as Germany and California." But she adds: "We are on the threshold of the next era in mobility, and it's clear to everyone in which direction we're headed."

Divided government lacks coherent strategy

VW鈥檚 emissions manipulation was also a wake-up call for many German politicians. They realised that Germany and its mighty automotive companies lag behind when it comes to sustainable mobility.

All three major carmakers have already ventured into new mobility business areas, such as electric vehicles and car sharing. But these businesses remain miniscule when compared to conventional sales.

On an international scale, change might be coming fast. The global share of electric vehicles is currently below one percent. But the tide will quickly turn, according to projections.

that as soon as 2030, up to half of new cars sold might be at least partially electric-powered. that between a third and a half of new sales will be fully electric by 2040.听

Progress in Germany has been slow. Few expect the government to keep its target of having one million e-cars on the road by 2020. In early 2016, a paltry 25,502 were registered in the country (For more details, read the 威力彩玩法 dossier The energy transition and Germany鈥檚 transport sector and the factsheet Energiewende in transportation: Vague goals, modest strides.)

To kick-start e-mobility, the German government introduced a buyer鈥檚 premium of up to 4,000 euros in the spring of 2016. But the incentive has so far been a 鈥瀎lop鈥�. Experts say this is because the incentive itself is too small, the charging infrastructure insufficient, and the e-cars on offer are not attractive enough. 听

According to confirmed by industry experts, the car industry again used its lobbying prowess to prevent government plans for a more ambitious buyer鈥檚 premium. The original incentive would have included a binding e-car quota for the carmakers, as well as a levy on combustion engines depending on their size. But the car lobby successfully fought what it saw as a 鈥渟tigmatisation of larger vehicles鈥�.

Critics say progress is slow because the government lacks a coherent strategy on renewable mobility. They claim this is partly because the government itself is deeply divided on the issue: the environment ministry would like to move forward, for example with diesel bans in cities, but the ministry of transport is widely considered close to industry, and an obstacle to change.

This issue was also brought into focus by the publication of the transport ministry鈥檚 Transport Infrastructure Plan 2030, which earmarked the largest part of the budget to building roads rather than focusing on renewable mobility.

But Mock believes policy priorities have started to shift in the wake of the emissions scandal. 鈥淧oliticians start to wonder: 鈥榃hat is really in the interest of the car industry? Should we protect it in the short term? Or should we not better try to give it a good position for the longer term?鈥�"

VW agrees that Germany's policy on e-mobility is far from ideal. "The example of Norway shows how fast e-mobility can develop if supported accordingly on all levels," spokesperson Fronzek says.

A new dawn?

Recent announcements by carmakers and their CEOs suggest the companies are now ready to overcome their reluctance and embrace the mobility challenges in earnest.

In mid-2016, VW announced its 鈥淪trategy 2025鈥�, which included a 鈥渕ajor electrification initiative鈥�, and also a push into digitalisation and autonomous driving. The company said it expected to sell between two and three million e-cars by 2025 鈥� which would mean around one in four VW cars sold at that date would be electric.

VW CEO Matthias M眉ller said his company faced the 鈥渓argest transformation of its history鈥�. He added: 鈥淭he word evolution is much too weak to describe what lies ahead [鈥�] not only automobiles face dramatic changes, but mobility will be defined in a new way.鈥� (For further details on VW鈥檚 plans, read the 威力彩玩法 factsheet Dieselgate forces VW to embrace green mobility)

Experts consider VW鈥檚 plan a fundamental shift for the whole industry, not just the company. 鈥淚f they are serious about their announcements on e-mobility, this is a gigantic step, and could transform the entire market, because VW produces such huge car volumes,鈥� says Mock.听

Within weeks of the VW announcement, Daimler CEO Dieter Zetsche also heralded dramatic changes to move the maker of Mercedes-Benz and Smart cars into the future of mobility.

鈥淒aimler will radically develop into a different company within the next ten years,鈥� Zetsche said. He explained that the company would become a service provider and launch its own sub-brand for e-cars. 鈥淭he fundamental change has begun,鈥� he added.

A Daimler manager, who did not want to be named, shortly after Zetsche鈥檚 announcements: 鈥淲e said before that if you are too early, you lose money. Now the view is if you are too late, you lose the market.鈥� (For more background on Daimler鈥檚 plans, consult the 威力彩玩法 factsheet Reluctant Daimler plans 鈥渞adical鈥� push into new mobility world)

Many experts still consider BMW the leader in the field of new mobility among German carmakers. It founded the electric sub-brand 鈥渋鈥� years ago, and is so far the only German carmaker to have launched an electric vehicle - the 鈥渋3鈥� - which was not based on a model originally developed for a combustion engine.

But i3 sales have remained lacklustre, and BMW was torn about whether to accelerate e-car development in early 2016. Following shareholder criticism, CEO Kr眉ger announced in late September that the company would launch the first electric Mini car in 2019, followed by an electric version of the BMW SUV X3. (For details, please refer to the factsheet Early e-car starter BMW plans new mobility sprint.)

Most industry experts agree that senior members of the carmakers鈥� management have realised they need to move fast to avoid being left behind.

鈥淩ecent CEO statements show the future challenges are now top of the agenda,鈥� says McKinsey鈥檚 M眉ller. 鈥淭here is no doubt about it. It doesn鈥檛 show up yet in new car models, but huge amounts of money is funnelled into development capacities.鈥�

The outlook for German carmakers in new mobility world - Culture Wars

But it will not be easy for the companies to change course because this will require a profound cultural change within the carmakers. Each company has hundreds of thousands of employees, many of which have worked on combustion engines for decades. Therefore, there is a power struggle between new mobility business sections and the traditional core business areas.

听鈥淭he monolithic image of carmakers is no longer valid,鈥� explains Hochfeld. 鈥淲ithin the carmakers, there are forces, individuals, and sections that have understood what is at stake, and try to force change, and others who put their foot on the brake. Even if the change agents are still a minority today, the balance of power might look different in the near future.鈥�

Mock agrees with this analysis. 鈥淔or example, the electric 鈥榠鈥� brand within BMW has an interest in pushing electric vehicles. But, on the other side, there is a very large conventional part that wants to sell its technology as long as possible, and tries to influence laws accordingly. The lion share of profits continues to be generated by the conventional business, which therefore enjoys top priority.鈥�

Exacerbating these problems is the fact that new mobility businesses risk 鈥渃annibalising鈥� old business sections. The spread of shared car ownership, for example, is likely to eat into total car sales, and e-car sales hit sales of combustion technology.

But VW's Fronzek says his company is not concerned new mobility businesses will eat into existing ones: "We believe new business areas will offer us the opportunity to grow and offer new choices to our customers." He adds: "The development of conventional and alternative engines has been running parallel at Volkswagen for many years. We don't see this as a contradiction."

Likewise, Daimler spokesperson Herdlitschka says new mobility services will supplement existing business models, rather than replace them. "We will increasingly turn into a service provider. But our research shows that people's desire to own a car will persist. Car sharing is not a question of 'either/or', but of 'also'."

But when it comes to transformation, new competitors such as Google enjoy important advantages: Unlike carmakers, they have rapid and even disruptive change built into their DNA, and do not carry the baggage of a venerable combustion heritage that might suffer from the success of any new mobility ventures

A question of money

Carmakers must also confront the challenge of dealing with the massive investments needed for a successful transformation. This is particularly urgent for VW, as the company has to pay more than 15 billion euros in fines and compensations to settle the emissions scandal.

The topic will be delicate for all German carmakers - even as they continue to be hugely successful, reaping billions of euros in profits from increasing their market share in many countries all over the world.

But they may, of course, face leaner times in their traditional businesses, which would make an investment push more difficult to finance.

The 鈥渟pectacular growth鈥� of recent years in markets such as China might be coming to an end, according to McKinsey鈥檚 M眉ller. 鈥淕oing forward, we will see a slowdown in many former growth markets 鈥� with related questions of overcapacities, increased competition, and price pressures. This is a very important trend that should not be forgotten when talking about the pending technological changes.鈥�

M眉ller argues that stricter environmental standards will put further pressure on profits: 鈥淚t has been repeatedly shown that consumers are not prepared to pay more for 鈥榞reener鈥� cars. Therefore, it will exert enormous pressure on profitability if carmakers need to invest to develop cleaner engines.鈥�

Another obstacle for massive investments in new technologies are the carmakers鈥� owners as their shareholders want to see regular dividend payments.

听鈥淭he pressure from shareholders, and quarterly reports, are an important obstacle for such a fundamental transformation,鈥� says the ICCT鈥檚 Mock.

He said companies with a different shareholder structure - such as Japanese Toyota, which is largely family-owned - find it much easier to pursue long-term goals, which might be risky in the short term but eventually pay off. 鈥淭he German carmakers do not enjoy this luxury. They are often trapped by betting too much on existing technologies, and trying to market them as long as possible, instead of managing the transition to new technologies.鈥�

Yet again, new US competitors might enjoy important advantages in the area of financing. Google and Apple sit on enormous amounts of cash that make the carmakers鈥� budgets pale in comparison. Tesla and Uber, on the other hand, have acquired large amounts of venture capital from investors who encourage risk-taking and do not expect dividend payouts anytime soon.

But McKinsey鈥檚 M眉ller argues that the likes of Google and Apple might face their own difficulties when it comes to financing. 鈥淭he average returns in the car industry are far below what these IT players are used to. They will have to ask themselves whether the mobility business will satisfy their high expectations. The incumbents, on the other hand, are 100 percent committed to this segment, and used to operating in this yield environment 鈥� this is definitely an advantage.鈥�

Hochfeld believes carmakers may have to split new and old business areas to secure access to more capital. 鈥淚t鈥檚 a very big question if they can remain attractive for investors with their old model, which implies financing new mobility areas with income from the conventional business.鈥�

鈥淔inancial markets can be an important driver of structural change,鈥� he adds. China鈥檚 largest carmaker BAIC, for example, split off its e-car subsidiary to gain access to venture capital to finance research and development, says Hochfeld. Financing troubles were also a major reason for the split of major German utilities E.ON and RWE.

Premium technical leadership

Internal divisions and resistance, as well as problems with access to capital, might be crucial shortcomings for German carmakers in the race for the future of transport. But experts warn against writing off BMW, Daimler or VW. They believe the incumbents have at least one massive card up their sleeve: Their technological know-how, and a proven capacity to innovate.

鈥淢any people simply do not fully appreciate how complicated it is to build a car,鈥� says Mock. 鈥淭he traditional carmakers have a gigantic head start in this area 鈥� even if time is not on their side.鈥�

Many experts stress that German carmakers are particularly well positioned because of their large presence in the premium segment, where innovation traditionally plays a prominent role, and large margins give the companies money to invest.

German carmakers have captured 72 percent of the global market for premium cars, . Study author Hubertus Bardt argues that the key is the carmakers鈥� ability to innovate.

He also stresses the fact that German carmakers have a strong presence in the mass market. 鈥淭he combination of strong and independent brands in the premium and mass-market segment is a unique advantage of the German car industry,鈥� argues Bardt.

Bardt uses the number of self-driving patents as an indicator for innovation capacity: 58 percent of global patents in this area are registered by German companies. Top of the list is supplier Bosch with 545 patents, followed by VW subsidiary Audi with 292, and supplier Continental with 277.

The statistics also show that Google has more self-driving patents (198) than either Daimler (156) or BMW (142). Nevertheless, industry experts believe Daimler CEO Zetsche was not joking when he remarked earlier this year: 鈥淭echnology wise, Tesla has nothing that we couldn鈥檛 have too.鈥�

听M眉ller adds: 鈥淚 believe the level of engineering and car technology knowledge will enable German companies to build the best e-car.

鈥淚t鈥檚 a definite advantage for the incumbents that cars are an extremely complicated and tightly regulated product, with extreme demands on security. It requires an enormous know-how, which can be found in the carmakers [鈥�] We must not underestimate the technological developments and innovations the car industry is capable of, in conjunction with suppliers.鈥�

The closely-knit network between German carmakers, suppliers, engineering firms and research is also often seen as an advantage for the incumbents. According to a : 鈥淭he structure of this automotive cluster in Germany is probably unique worldwide and enables continual productivity gains and innovations [鈥�] Germany is well placed to still be one of the most important manufacturing nations in the global automotive industry in 2025.鈥�

Mortal danger offers huge opportunity

But some experts say it is still an open question as to how important a lead in classic vehicle hardware technology will be. 鈥淭he core competence of the future is the question how the car can be digitised, steered, and integrated into the entire transport network,鈥� says Mock.

The production of battery cells might be another important part of the car鈥檚 value chain, and it currently looks unlikely that German carmakers will enter that market. argues that the carmakers should join forces in this field. 鈥淚n the medium and longer term, Germany can鈥檛 afford to have an important part of e-mobility鈥檚 - and therefore the future car鈥檚 - value chain abroad.鈥�

BMW, VW subsidiary Audi, and Daimler already cooperated when they agreed to buy Berlin-based Nokia mapping unit HERE for almost three billion euros in 2015. Digital maps form the basis for driverless cars, and the carmakers wanted to avoid reliance on Google and Apple mapping services.

But it remains an open question how important carmakers鈥� core strengths will prove to be. The technological figureheads of the German car industry are the engine and vehicle integration, both of which are easier in electric cars.

Similarly, carmakers鈥� reliance on the premium segment might be a disadvantage in a new mobility world, which might be dominated robotaxis.

M眉ller says: 鈥淚n the past, a premium car made in Germany had the brand, power, design and emotion that was honoured the world over. We will have to see whether the future will offer the same opportunities for differentiation.鈥� But he believes the German incumbents鈥� advantage won鈥檛 be lost. 鈥淎 new powertrain does not mean a vehicle鈥檚 other attributes become obsolete. There will also be a premium segment in the new mobility.鈥�

Mock agrees: 鈥淧remium does not necessarily mean combustion engine. The premium segment can also be entirely redefined. I鈥檓 quite optimistic as far as the German carmakers are concerned. They do not face an abyss. I believe the most probable scenario is that carmakers recognise the transformation and manage to adapt.鈥�

Even though some experts, such as , put the chances of German carmakers failing in a new mobility world at 50:50, M眉ller stresses the companies 听should see the expected revolution in a positive light.

鈥淢ost people prefer to read danger scenarios. But you can also describe all this in a positive light: An incredible change is underway, which opens up entirely new possibilities for German carmakers in the future.鈥澨�

听

*Like the 威力彩玩法, Agora Verkehrswende is a project funded by Stiftung Mercator and the European Climate Foundation.