The engine of Germany's wealth is blocking its future

https://europeancorrespondent.com/en/r/the-engine-of-germanys-wealth-is-blocking-its-future

by mariuz • 5 months ago

248 329 5 months ago

dinkblam• 5 months ago

everything in germany's economy is going downhill, the troubles in their car industry is just one symptom (but not the cause)

gigatree• 5 months ago

Uh oh

oytis8• 5 months ago

Do not worry, the army is going downhill too

rokhayakebe• 5 months ago

What is the cause?

lm284694• 5 months ago

imho there are multiple, starting with the pension and healthcare system which are not sustainable with the current demography trend, which pushed them into going all in with immigration, which fractured whatever was left of german identity (which was arguably already wiped out after ww2 and the cold war). Taxes are going up, retirement age is increasing, pensions are decreasing, public services are getting worse year after year, there is nothing young people can focus on, nothing they can expect to have better than their parents or grand parents, most will never own their place. The self sabotage of the energy sector certainly didn't help. No long term vision + no clear way to improvement + no sense of appartenance = game over, and this is hitting most of the west at once, it's all about individualism and consumption, you can't build societies on these principles.

ahartmetz3• 5 months ago

Where did you get that opinion? Germany is not doing great but OK in the group of Western countries, and its car industry is both very imporant and in trouble, so it's not an unreasonable opinion that things would be better without that trouble.

tw-20260303-001• 5 months ago

It's not. It's more like a cancer patient with an Überweisung for their first cancer screening but dragging their feet to go and do it. They know is it bad and will get worse but they're afraid of facing it.

Towaway693• 4 months ago

Germany has a great layer of "consultants" that fudge the books and make everything look profitable and rosy. It's the land of "Arbeitsgruppen" and "Berater" - folks that ensure things get buried and forgotten.

But there is no investment in the future, no investment in infrastructure and no investment in anything creative, in fact, that's were cuts are made, in the arts and culture.

Once a society can no longer afford the arts, you know there is something going wrong and Germany is going wrong. Perhaps "klagen auf hohem Niveau" (complaining from up on high) but the higher they are, the further they fall.

lagrange772• 5 months ago

Imho, the german mentality just doesn't fit today's economy. Too risk averse, too conservative. Creativity is not really embraced.

The state of the german IT sector also shows that.

Most startups have nearly no moat at all and purely live off marketing with some sprinkles of corporate identity.

Foobar8568• 5 months ago

In Switzerland, we use a lot of German and Switzerland born products, and they mostly suck.

madaxe_again• 5 months ago

Perfect regulatory capture is like putting a toddler in charge of your household - corporate organisms, like toddlers, do not know what is good for them, and are not willing to accept short term pain for long term gain.

I see parallels with unions in the U.K. in the 70s, as they were ultimately the controlling entity of a lot of industry - and they too were unwilling to accept short term pain for long term gain, which ultimately resulted in the collapse of British manufacturing, as money that should have been reinvested in plant upgrades and technology instead disappeared into exorbitant - unfathomable by today’s standards - pension plans and pay packets.

Anyway. I suppose this is just humans 101, and today it’s the German car industry insisting that eating their body weight in candy today will have no consequences tomorrow.

pc862• 5 months ago

Unions don't exist to protect the industry or maximize industrial gain, they exist to get as much as they can for the most senior members of the union (with union leadership being at the top) and proportionally less the less senior you are. By design they are more than happy for individual companies or even large swaths of industry to disappear if it means more spoils for the senior members in the short term.

joe_mamba13• 5 months ago

I found a very detailed and well argumented opinion piece on X that struck really hard on this topic: https://x.com/BetterCallMedhi/status/2027625247068065864

Here's the plain text in case you don't want to go to X:

"I spent time in Shenzhen last year and when I saw Merz come back from China saying Germans need to work more I immediately knew what broke his brain because I lived the exact same cognitive shock

my first week in Huaqiangbei I burned through 4 prototype iterations of a motor controller board for less than a thousand bucks total, back home a friend was working on something similar and spent over 12 thousand for a single revision that took almost two months to arrive

when you live that contrast in your own hands with your own project something permanently shifts in how you see the world and it goes way deeper than speed & cost

what Shenzhen actually built is a collective learning organism, imagine 20 PCB fabs 15 injection mold shops 30 component distributors and a hundred firmware freelancers all within a 2km radius, looks insanely redundant from the outside until you realize redundancy is actually information density in disguise

I watched this firsthand with an injection mold supplier I was working with, this guy had seen a hundred founders iterate similar thermal designs over 6 months so he proactively modified his tooling before I even opened my mouth, he knew what I needed before I knew what I needed, the intelligence lives in the relationships between the nodes and it compounds daily

the west thinks about manufacturing as a cost center you optimize by centralizing…

China accidentally built a distributed neural network of manufacturing intelligence where knowledge diffuses horizontally across thousands of agents faster than any single western company can process internally

so when Merz comes back and says we need to work a bit more I think he saw the problem but COMPLETELY misdiagnosed the solution, telling Germans to work harder is like telling a horse to gallop faster when the other side built a combustion engine

the gap is ARCHITECTURAL

it’s ecosystem density, you need a custom connector in Shenzhen you walk 200 meters, in Munich you send an email and wait 3 weeks

it’s iteration speed, parallel search vs sequential optimization at the system level, it’s risk tolerance, Chinese founders ship something broken on Monday fix it Tuesday ship again Wednesday while European companies are still in the approval phase for the pilot program of the feasibility study…

and Merz only saw the surface, what he missed is the tier 2 cities like Hefei Chengdu Wuhan replicating the Shenzhen model at scale right now

BYD going from irrelevant to outselling every european automaker combined in roughly 5 years, Huawei building its own 7nm chip under maximum sanctions when every analyst said it was physically impossible & behind all of that a government that treats advanced manufacturing as an existential national priority while europe debates whether AI needs another ethics committee

I think what we’re watching is the most asymmetric economic competition in modern history and most western leaders are still framing it as a productivity problem when it’s actually an ontological one

Europe & America are optimizing variables that China stopped tracking years ago meanwhile China is compounding on dimensions the west has no framework to even measure Merz at least had the courage to name it out loud and I respect that genuinely but working a bit more inside a broken architecture just means you arrive at the wrong destination slightly faster

Europe’s answer to China is always a committee, a regulation, a 5 year strategic plan and a press conference

China’s answer to anything is ship it tomorrow and figure out the rest next week

one side is trying to predict the future the other side is building it live and adjusting in real time, that asymmetry alone tells you everything about who wins this century "

okokwhatever• 5 months ago

This is brutal truth

menaerus5• 5 months ago

Truth that not many are ready or want to hear.

lotsofpulp• 5 months ago

Europe & America are optimizing variables that China stopped tracking years ago

Net income?

looks insanely redundant from the outside until you realize redundancy is actually information density in disguise

Everyone knows redundancy costs money today in exchange for security tomorrow. Presumably, Chinese executives are earning more by keeping redundancy, whereas executives in Europe and the US earn more by removing redundancy.

How does China incentivize its executives to spend money on redundancy? I have to imagine it's some type of top down system that fights against personal interests to advance the interests of the tribe (obviously at the expense of personal liberties).

joe_mamba13• 5 months ago

Net income?

Whose income? The automotive engineers being mass layoffed?

Liftyee• 5 months ago

Doesn't necessarily have to be top down. It could be cultural, the quarter-by-quarter market economics incentivises "money today" (just look at all the disasters caused by poor maintenance) but cultural norms of long-term thinking could drive prioritisation of "security tomorrow". Also, a sense of personal duty and honor instead of accumulating money being the sole arbiter of social status.

kenhwang• 5 months ago

It's not redundancy, it's capitalism.

There is a large number of competing and overlapping suppliers because they're all competing for business and none have gained market dominance.

The US and most of the west is largely in a post-capitalistic market, where competition is no longer necessary because monopoly/duopoly status has been reached and segment leaders can simply use their capital to prevent challengers instead of competing on product/service quality, and margins can be widened and quality can decrease because there's no other option.

To me, it seems the solution is to make it possible again for smaller more agile players to compete against bloated and stagnating established companies. The large legacy companies are preventing innovation to protect their domain instead of innovating to keep up.

cjbgkagh• 5 months ago

It’s one of those ironies in power structures, how a ‘communist’ society can act as turbo capitalist one and visa versa. It’s a mistake to think that just because things are one way at the top they’re the same way all the way down the power structure. Even with heavy corruption there are competing corrupt entities which can lead to a healthy competition of governance as an emergent behavior. Dysfunction at one level efficiencies at another. Corruption is self corrupting so it’s difficult to maintain at all levels.

In my view much of the ‘corruption’ in the west takes the form of very legal financialization, this massively rewards consolidation as the high debt to equity ratios means low interest rates are paramount and combining two entities allows one to act as insurance for the other lowering the risk component of the interest rate allowing the entity to out compete the remaining entities. Once reaching a certain size the company becomes too big to fail and the risk component merges with the US government. Since the US government is very receptive to donations these companies are in effect able to form an oligarchy. Compare this to China where companies are subordinate to the politicians.

I think the West overestimates the deleterious effects of corruption of our competitors and underestimates our own systemic (and legalized) corruption.

js8• 5 months ago

How does China incentivize its executives to spend money on redundancy?

IMHO, China has two parallel hierarchies of status - one in the ruling party, other in private sector. So the ruling party can maintain the capitalist competition, and dictate overall industrial policy, which fuels the innovation.

In the West, the rich people owning capital captured the political class, so there is only one status hierarchy now - of capitalists. This hierarchy ossifies and becomes increasingly resistant to competition - why invest into something new when it will most likely cause your individual wealth to decrease?

I think this manifests as the wealthy class increasingly speculating on the rising price of assets and extracting rents from them, rather investing in productive infrastructure. So the neoliberalism (capitalism) is in a sort of tragedy of commons, where wealthy individuals benefit more from this financialization rather than actual production.

The West avoided this in the past by having strong unions and middle class controlling the policy through democracy, which balanced the accumulation of wealth. If China can in the future avoid this (or other) trap, where the status elite ossifies and prevents investment in the interest of whole society, remains to be seen.

linkregister• 5 months ago

This is an excellent analysis of the issue.

treis• 5 months ago

This is more like inefficiency in sheeps clothing. Being able to iterate that quickly and cheaply relies on spare capacity and people making salaries 10-25% of what Germans get.

riskd• 5 months ago

Source?

joe_mamba13• 5 months ago

people making salaries 10-25% of what Germans get.

The likes of Huawei pay their engineers six figure salaries plus tonnes of perks. You're crazy if you think skilled Chinese engineers make only 15% of those in Germany. All their engineers would emigrate abroad if that were the case and they wouldn't be making domestic CPUs and AI accelerators.

orwin3• 5 months ago

8 years ago, a new unskilled factory worker in china made the equivalent of 700-800€ hourly, with free food and accommodation (this cause issues in rural areas but this isn't the subject).

I assume salaries have gone up soon since, but even if they stagnated, what's the entry-level pay for unskilled factory work in Germany? Just to be sure it's more than 21k.

afavour• 5 months ago

China accidentally built a distributed neural network of manufacturing intelligence where knowledge diffuses horizontally across thousands of agents

I find it difficult to take statements like this seriously.

China has built an incredibly dense manufacturing zone. They've done so by manufacturing more cheaply than other countries do, a key element of which is paying workers less than any European country would be able to do. The rest of what's being described is just what falls into place once you've created that dense, cheap in demand manufacturing zone.

joe_mamba13• 5 months ago

a key element of which is paying workers less than any European country would be able to do

Not true. Manufacturing labor costs are higher in China than in Eastern Europe. For electronics industry I mean, not sweatshops for clothes and sneakers and aliexpress knicknacks. China stopped being the place to go for cheap labor a while ago. You go there for the expertise.

edgolub• 5 months ago

"distributed neural network" is just AI-bro speak, most likely generated by an LLM.

So I would just ignore that whole comment.

What you said is the truth.

Cheap, efficient, fast manufacturing process. I am a software dev, I happen to have worked with Chinese software APIs related to manufacturing and logictics. Move fast and ship broken stuff on monday, and forget to fix it - that is the reality, but somehow people expect they maintain some level of quality now.

Just try working with products like TikTok, their APIs and documentation, the endless headache you will get will show you how they do itterate, but quality is still only barely a factor.

ghosty141• 5 months ago

100% agree. I am whitnessimg this on a daily basis working for a german company that develops both hard and software for indistrial machines.

bix6• 5 months ago

Meanwhile our top VCs continue to invest in SaaS, AI (new SaaS), and crypto (ponzi returns) because I guess the only thing that matters is widening the wealth gap and enjoying the yacht life.

I work in VC and make early stage investments primarily into industrial or other physical industries. It often feels like an uphill battle trying to get people to take interest in this stuff.

My most recent company sources from China because the US infrastructure can’t supply what we need. This is a company that will be worth billions when it scales up and the US literally cannot supply it because our factories are so ancient.

SirHumphrey• 5 months ago

It's also that the west collectively convinced themselves that the economy could be built on high value knowledge work and services and manufacturing will be handled by someone else. Of course people would rather live near some offices, or maybe a workshop than a heavy industrial site...

The transition of my country from a socialist to a western capitalist system included a mass closure of heavy industry and what remains is dying a slow death of high energy costs. I remember when a coal mine closed there were all those marvelous ideas how the area would transition to high tech programming jobs; the thing that actually saved the area was a fuse manufacturing plant.

heisenbit• 5 months ago

This diffusion requires a different attitude towards IPR. Western countries prioritize protection of past investments (or dometes just the first to stumble through a gate or file first).

n8cpdx• 5 months ago

Is there realistically a path to the west learning any of these lessons without going through WW3?

It’s not like any of this is news. My newspaper of choice has been telling me about how fast china moves, in vivid detail, since at least 2018 - others probably knew much earlier than I did. I watched a graphic documentary on YouTube about Shenzhen in 2019 that gave me all of the same information in this tweet, minus the accomplishments that have happened since then.

My own eyes have seen how their consumer goods have transformed in a very short time. Maybe other Americans don’t notice because the key categories (tech, cars) have so much protectionism. I’m not sure about the Europeans.

The west is better at coming up with excuses and red tape than actually solving problems, it seems.

lm284694• 5 months ago

Is there realistically a path to the west learning any of these lessons without going through WW3?
The west is better at coming up with excuses and red tape than actually solving problems, it seems.

Most of the west still has this paterno-colonialist view of the world, we're too complacent, too sure of ourselves, it never changed, just look at how Trump talks about Iran, he is completely clueless about the history of this region of the world, they'd nuke themselves before accepting the unconditional surrender he asked for... It was the same with China: "let's move all our industries there, they are too dumb to figure anything out and they'll will be our cheap labor forever", well no, they're just as smart as us and as soon as they reached the threshold necessary to provide education to the mass they also reached our technological level.

It mostly is over for the west as we know it, demographically, politically, industrially, soon militarily, people who don't see it are straight up blind or historically illiterate, we're in a end of the Portuguese or British empire situation.

roughly2• 5 months ago

Europe’s answer to China is always a committee, a regulation, a 5 year strategic plan and a press conference
China’s answer to anything is ship it tomorrow and figure out the rest next week

Yes, god knows we'd never see the Chinese delivering 5 year strategic plans, and they're notably committee-averse.

A large part of China's success is they've been intentional about what they're doing - they've _had_ a strategy, whereas every time we consider that in the West, we're told that's a loser's bet and we need to just let the market do its thing.

peterfirefly• 4 months ago

It's not the 5-year plans that are driving China and most of the Chinese economy is untouched by the 5-year plans.

myrmidon2• 5 months ago

Looking back, people had the exact same kinds of reactions (regarded as cheap trash => cutting edge) to the Japanese electronics industry 40 years ago, with the eact same takes (overstated rationalizations focussing on process, organization, culture; I could probably find like 20 different books discussing those in excruciating detail in a minute).

But the simplest explanation is just basic economics and nothing else (growth being fueled by cost difference, mostly from cheap labor, and to a far smaller extend network effects).

I predict Chinese growth slowing down exactly the same way other countries did as wage gaps get smaller.

ThePowerOfFuet• 5 months ago

Here's the plain text in case you don't want to go to X

Nitter to the rescue!

https://xcancel.com/BetterCallMedhi/status/20276252470680658...

alephnerd4• 5 months ago

While Germany should invest in EVs and Green Energy, that alone isn't blocking German economic growth.

Almost all German exports have seen a precipitous drop [0]. EV exports wouldn't have helped given that Germany's two largest trading partners (the US and China) both enacted trade barriers against foreign exporters.

When the US enacted the IRA under Biden, a large portion of Germany Inc shifted to the US [1], but the German government and EU decided not to enact subsidies [2].

Similarly, China demanded JVs for German manufacturing companies to enter the Chinese market, which Volkswagen (with SAIC), Siemens (with SEPG), Mercedes Benz (with BAIC), and others manufacturers complied with.

Germany's economy was hollowed out because Germany Inc decided to shift capacity to it's two largest unified markets.

It's not like the PRC nor the US are allowing German EV exports already - for example, all of VW's ID4s sold in the US and China are being manufactured in Tennessee and Shanghai respectively.

This is why the EU has been pushing for a "rules based order", becuase otherwise individual EU states lack export markets.

[0] https://oec.world/en/profile/country/deu#yearly-trade

[1] https://www.ifo.de/DocDL/EconPol-PolicyReport_41_1.pdf

[2] https://www.cnbc.com/amp/2023/02/14/biden-ira-germany-rules-...

paganel• 5 months ago

This [1] is what really brought Germany's industry down, not the green non-sense spouted by articles like this one:

Gas prices rose to $70 per megawatt-hour in Germany — it makes it 6 times more expensive than in the US

Germany was relatively fine, industrially speaking, while it still had a working relationship with Russia and especially with cheap Russian gas. It all went to the gutters when the Americans imposed their imperial will on them, on the Germans (see also the Nord Stream fuck-up), and it has been a steady downhill road for the Germans since then.

To re-iterate, there's no German economic miracle that would allow them to be competitive against other indutrialised countries (such as the US) while they have to pay two or three times more for their energy inputs.

[1] https://x.com/MyLordBebo/status/2031015804179791877

miohtama• 5 months ago

Germany was also fine when they still had nuclear energy

dgacmu• 5 months ago

What a strange comment. The US did not force Russia to invade Ukraine, nor did it force Germany to respond to the Fukushima daiichi disaster by killing all of its nuclear power.

OgsyedIE• 5 months ago

It's a shame, too, because they are right about the hydrocarbon input price effects, but speculative in a bizarre way elsewhere. Germany had a selection of strategic hydrocarbon options in the 2000s and fumbled by picking the option that would later prove to launch revisionary wars that interrupt their export capability.

Even if we lived in an alternate timeline where the US was completely supportive of the 2022 invasion at the time, Germany would still be surrounded on all sides by countries with a vested interest in pointing nuclear deterrents at Moscow and lose their energy feed in the same way.

nairboon• 5 months ago

What a strange comment. The US did not force Russia to invade Ukraine

OP's comment doesn't state that. It refers to the US forcing Germany to stop Nord Stream.

kvgr• 5 months ago

What Imperial will if you dont mind asking? That they stoped buying gas from country that attacked europe and tries to overthrow democracy in other EU countries? Their delusion was in turning off nuclear... and it was exactly what russia wanted. By funding anti nuclear protests in EU, and selling more and more gas to make Europe attached. So when Russia does something bad, it is harder to sanction them. What happend in Germany is real political failure in seeing this, maybe even treason.

s_dev• 5 months ago

Non of these issues affect France because France had the foresight to invest in Nuclear tech that gave them energy independence from both the US and Russia while being green and sustainable. It's certainly not perfect e.g. France imports some Uranium from Russia but they are in a far better position than Germany. Germany has produced many brilliant people but it really has to self reflect on some of the major errors in big decisions it has made the past few decades.

basilikum• 5 months ago

Germany was relatively fine, industrially speaking, while it still had a working relationship with Russia and especially with cheap Russian gas. It all went to the gutters when the Americans imposed their imperial will on them, on the Germans (see also the Nord Stream fuck-up), and it has been a steady downhill road for the Germans since then.

That's quite the reversal of facts. Germany cut off Russian gas after imperial Russia started a full invasion on Ukraine. That was Germany's decision and has little to do with the US. The US also did not force Russia to invade Ukraine and to targeted kill Ukrainian civilians for their decision to strive for freedom, democracy and prosperity rather than being a corrupt satellite state to Putin's terror.

Energy prices undoubtedly skyrocketed after that, but that's just the immediate result of finally breaking with the politically engineered dependence on Russia. For decades Germany made itself reliant on Russian gas. What might have started as optimism after the cold war and the hope for good mutually beneficial relations with Russia turned into corruption and irresponsible ignorance and short term thinking at best.

Energy prices in Germany are so high because the German government deliberately sabotaged the shift to renewables. German politics made Germany dependent on fossil fuels that you can burn exactly once and that Germany has to continuously, expensively dig out of the ground and keep importing because Germany lacks enough natural gas. Digging something out of the ground to burn it once is not economic when the alternative of harvesting the sun and wind that just keep on giving you energy indefinitely exists. But Germany decided to deliberately stall building grid technology and farms for harvesting free unlimited energy. Instead they turned to Russia to get gas for cheapish in the exchange for letting Putin live out his imperialist plans. Russia's aggression is not new. They invaded Georgia in 2008 and started the war against Ukraine in 2014. Germany started building the Nordstream 2 gas pipeline, which would have even furthered its dependence, in 2015, after all that. And they kept the plan when Russia backed Assad and commited war crimes against the Syrian people.

_ink_2• 5 months ago

Wow, Denmark is leading manufacturing growth and the German government is still telling us that the hourly wage is the problem.

kaon_2• 5 months ago

Agreed. Actually - maybe no? Maybe the hourly wage is the problem. It's been too low for too long so there was no pressure to innovate. Denmark and Switzerland are big manufacturers with high wages that are continuously innovating. Maybe the Euro was a curse for Germany afteral? Without it their wages would have been higher.

scottyah• 5 months ago

Artificially increasing wages to get a better product is like Cargo Culting. Some people see successful companies paying their employees a ton, then assume that's what created the successful company when it's so obviously the other way around. But the politicians/union heads benefit from selling it the other way. This conversation just always gets derailed by pointing out how paying substantially below market is also bad, as if it were a counterpoint.

psalaun• 5 months ago

That's my point in France also: industries complain about the cost of workforce, therefore they've moved everything offshore for the last two decades and they are lobbying heavily for lowering the wages and taxes in order to "invest".

But there is nothing to invest into anymore, France's industry is dead (partly because of Germany with the Hartz agreement btw, lowering demand for italian or french goods which were already less competitive than german ones on export and domestic market because of the euro) and if they didn't care to put capital on automation when wages were high, why would they do it when work becomes cheap?

yetihehe2• 5 months ago

Almost all Poles are very surprised about the second country on that graph.

Edit: well, after some thinking and remembering all the banners for laser cutting and cnc machining in nearby areas (touristic region at that), there might be some truth to it.

cm2012• 5 months ago

The Polish manufacturing miracle is really well known among people who study economics so it's funny that natural Polish people wouldn't be aware of it.

pjc505• 5 months ago

That's basically just Novo Nordisk manufacturing Ozempic. Yes, it's big enough to distort all graphs about Denmark.

(the real lesson here is "make a product that everyone wants")

tokai2• 5 months ago

If you look at actual numbers it is clear that danish manufacturing is very healthy underneath the NN success.

varjag4• 5 months ago

Denmark is also a leader in offshore wind power systems, so no it's not just pharma.

ahartmetz3• 5 months ago

I'd really like to know which products that manufacturing in Denmark produces. Ozempic is a massive financial success, so maybe that is a large part of it? The lesson from Ozempic would be "Just have a huge hit come out of your R&D department", I guess...

Tade02• 5 months ago

...and be a relatively small country.

Novo Nordisk's sales numbers of 300bln DKK (~$46bln) amount to around 10% of Denmark's GDP.

tokai2• 5 months ago

Interestingly there was a public discussion in Denmark around 2016, about how the Danish labor market and industry should not end up approaching 'German conditions', even though the Hartz reforms were envied by some economically liberal Danish politicians.

_ink_2• 5 months ago

Looks like as if it was a good choice to not copy the Hartz reforma.

mentalgear4• 5 months ago

Germany’s powerful automotive lobby prioritized short-term dividends and executive bonuses over long-term survival. Instead of investing in EV innovation to future-proof the industry, they leveraged their influence with the conservative (CDU/CSU) and free-market (FDP) government parties to weaken national and EU emission targets.

This reliance on political lobbying rather than technological advancement was a fatal miscalculation: While executives spent the last decade fighting carbon taxes and stalling the EV transition, they ignored the reality of their primary export markets - most notably China where today German ICE cars are seen as obsolete - and the rest of the world rapidly pivoting to electric.

By choosing payday over progress, the "autobauers" & their political helpers have left the German workforce to pay the price. The looming job losses and economic instability are the direct result of a managerial class that traded their country’s industrial crown for a final decade of bloated bonuses.

d3ckard3• 5 months ago

It’s very disputable whether BEVs are industry’s future and your entire thesis depends on it to be true.

mentalgear4• 5 months ago

Not my entire thesis: It's the content of the article and otherwise well known.

pjc505• 5 months ago

Until recently (and probably with some pressure from VW) everything else was supposed to be phased out in Europe within a decade: https://www.spglobal.com/automotive-insights/en/blogs/2025/1...

CharlieDigital4• 5 months ago

    > It’s very disputable whether BEVs are industry’s future

As a technology, ICE is pretty much close to its peak. It's very hard to imagine significant improvements in ICE as far as efficiency, weight, and power output goes.

The same cannot be said for batteries and electric motors. We are still quite far from technological limits for the platform. It doesn't seem disputable at all that a platform that can still evolve and improve with significant room for growth will eventually overtake one that has peaked.

xoa• 5 months ago

It’s very disputable whether BEVs are industry’s future

It is not disputable (unless you're including Old Auto lobbyists I suppose). Without government imposed restrictions keeping the public from buying Chinese BEVs without an outrageous markup (or at all) the ICE industry would already be imploding. The government could and should require that all vehicles be under full control of their owners with no remote telematics required, or even allowed necessarily (and heavily restricted even then). That'd resolve concerns about Chinese kill switches or gathering intel data or whatever. But of course the Western industry hates that too because they want to fully enshittify cars next and turn them into locked-in subscription revenue and advertising data sources. So they can't even compete on trustworthiness. Total embarrassment and also long term ruin.

The present gas price mess and global instability Trump has kicked off is just going to draw an even bigger line under both the personal and the national security value of not being tied to any single source of energy for mechanized transportation. BEVs are simply fundamentally superior particularly in a risky world.

TheJoeMan• 5 months ago

Not to mention, those same carbon emission regulations/targets they are lobbying/fighting against did not come about in a vacuum. The regulations were intentionally cranked up to "unachievable" levels for ICE vehicles from groups pushing other technologies.

asymmetric• 5 months ago

I'm curious, what do you think the future of the car industry is, then?

theK3• 5 months ago

No it is not. Anything combustion related certainly isn't, as has been proven ad absurdum. All non BEV non combustion alternatives are, optimistically phrased, in their infancy. So yes, BEVs are the future for the next 20-40 years at a minimum.

Edit: clarity

darth_avocado• 5 months ago

Germany’s powerful automotive lobby prioritized short-term dividends and executive bonuses over long-term survival

Gee I wonder where they got the ideas from

whiteboardr4• 5 months ago

It's not as simple as 100% of this is on the car manufacturers.

There's a lot at play, which in combination led to this "perfect" storm.

Energy policies and hence ever increasing energy prices, bureaucracy almost as bad as Italy, governements making technical decisions for unprepared manufacturers by setting goals of EV production numbers and above all phasing out the cornerstone of the countries engine, literally: ICE power units.

And yes, most management are of an era that truly doesn't understand the convergent challenges in a mixed market of ICE and EVs. Shortsighted decisions have been made, throwing out the baby with the bathwater - craftsmanship, vision and engineering prowess.

What was an engineering driven industry with a say in where all this is headed became a soulless marketing machine, merely scratching the surface of what needs to be done.

They created some very bad "sci-fi" by plastering screens everywhere in interiors while still treating software like some part you can outsource to the lowest bidding supplier, swapping these out every other model range or update.

Actual internal research and guidance got killed off around the early 2010s by outsourcing all of it externally.

Besides, the culture and politics within these corporations are the worst i ever encountered in my whole career.

It's a very grim picture we're looking at but there's nobody, neither in upper management across boards nor in politics actually being able to see the misery they're in, let alone doing something about it.

Glad i left almost 10 years ago but still sad, since all I had to witness is effecting society as a whole and not in a good way.

It's really just the beginning of what is to come.

pimeys• 5 months ago

I'm not working in this industry, but I am living in Germany. I'm lucky enough to take remote jobs all around the world, but I'm a bit scared on what it means politically in Germany when the sh*t really hits the fan.

This might be one of the reasons I should not buy an apartment and settle in Germany...

atmosx3• 5 months ago

If you look at their stock performance and management compensation the last 25 years, much of the responsibility seems to lie with the manufacturers themselves.

They had roughly two decades to adapt, but instead they often relied on strategies like pressuring German workers with the possibility of relocating production to Poland to keep wages down, while investing little in research and development during a period when sales were strong and new markets, such as China, were opening up.

flakeoil2• 5 months ago

The fact that Angela Merkel closed down all nuclear power plants was probably a big part of the lower interest in EVs in recent year. Although they invested a lot in solar and wind, the solid base of electricity generation disappeared and thus the trust in electricity for transport disappeared amongst automotive management and the population at large.

oytis8• 5 months ago

It's not as simple as 100% of this is on the car manufacturers.

Another big lobbyist is chemical industry. They are very reliant on gas.

raxxorraxor2• 4 months ago

The problem is that there wasn't a correction of these business policies. It still is the same as before, engineering talent gets outsourced and software and more frequently also hardware parts is something that Germany despises completely by now. You are in sales or legal, anything else is secondary.

V__• 5 months ago

Another big problem is the mentality. "We have always done it this way" and "I don't want to change it" is extremely prevalent. I say this as a German.

This is also reflected in the big political parties, which would rather keep these beliefs alive than inspire change.

I really don't see a solid economic future for Germany when enough other countries implement more progressive economic policies.

whiteboardr4• 5 months ago

I would disagree.

The willingness to change is there, it's mostly the motives and what is being targeted where the problems are.

We as a country lost our balls.

Decisions are increasingly made on an emotional basis, and the poster child for this has been the politically calculated exit of nuclear power based on the Fukushima accident to gain an election win.

Most of senior management is trying to act like suddenly they are some cool nimble startup CEO that can burn through cash until the subscription fees for lane keeping assists and heated seats are paying the bills.

It's all buzzwords being thrown around without anyone really caring for reality.

Just looking at how the "dress code" changed over the last 10 years in automotive is funny by itself.

Hefty statements, zero backing and ever shrinking balls.

The bill is going to be huge.

odiroot• 5 months ago

Another big problem is the mentality. "We have always done it this way" and "I don't want to change it" is extremely prevalent. I say this as a German.

Interestingly it's not only the domain of the conservatives (e.g. CDU/CSU) to cut any discussion this way. Social democrats (and their voters) use the same argument, just in instances where it fits their program (e.g. labour laws).

I really don't see a solid economic future for Germany when enough other countries implement more progressive economic policies.

The only party suggesting any such policies consistently fails to clear the 5% threshold as of late. Evidently, the electorate is satisfied with the status quo.

svara2• 5 months ago

I really don't see a solid economic future for Germany when enough other countries implement more progressive economic policies.

People do change their minds when the pain becomes too intense to ignore, but that is what it takes.

boondongle• 5 months ago

For me its as simple as mature companies are extremely difficult to reorient towards working at a loss through R&D.

People hold up China as an example but China was not displacing any local industry including its own. It's incredibly easy to do that because it's greenfield. Fast forward 20 to 30 years when new thinking might impact BYD or CATL's bottom line? They may not look so forward-thinking.

noosphr• 5 months ago

China couldn't get a local ICE industry running no matter how many times it tried in the 70s, 80s and 90s. So they made a bet on the next technology.

They not only didn't have a local industry, they knew they couldn't make one and adjusted government policy.

hangonhn2• 5 months ago

People hold up China as an example but China was not displacing any local industry including its own. It's incredibly easy to do that because it's greenfield. Fast forward 20 to 30 years when new thinking might impact BYD or CATL's bottom line? They may not look so forward-thinking.

I would add that despite joint ventures, China's domestic internal combustion engine industry never really caught up. In fact their best engines were made by wholly domestic companies but those were not nearly as good as those made by Western and Japanese companies.

As Warren Buffet noted over a decade ago, BEV is an opportunity for China to simply skip over all of that and just leapfrog everyone else. So it's even better than greenfield. It's green field for them while allowing them to completely disrupt existing foreign competitors.

Spooky233• 5 months ago

It's the standard innovators dilemma nonsense, with the added drama of the car case that the innovator (Tesla) shot itself in the foot due to a madman in charge.

The entire ecosystem of automaking is just like tech - clusters of complimentary industries. There's a symbiotic relationship between Mercedes, Ford, BMW, GM, etc and their suppliers -- many of whom in the american case were former subsidiaries of the automaker.

That's why Ford, GM, Porsche, Mercedes, BMW, etc have a hard time closing the deal on EV. The American car companies are more fucked because they've engineered the business around compliance requirements to mostly only make trucks. It's hard to eat your children. Meanwhile, BYD isn't run by a bipolar drug addict, and they are going to back up the truck, slowed down only by protectionism. I drove one when traveling, and it felt like driving a Tesla in 2015.

For companies building cars in Germany, the US and to some extent Japan & Korea, we're living in a do-over of 1976, except China is Japan.

jandrese3• 5 months ago

There is another dimension to this. All of the legacy auto manufacturers, without exception, have been dragging their heels on EVs. Lots of people talk about corporate inertia and shareholders and whatnot forcing the companies to be irrational, but I don't think that's entirely correct.

I think the executives at these companies have long since identified that EVs are a far more fundamental existential challenge than people normally understand. The reason I think so is that Internal Combustion Engines are the primary barrier to entry into the car market. In an all electric world they are once again open to competition from startups who can source the same commodity motors, batteries, controllers, and the like. The barriers to entry drop and it becomes a brand new world of competition from all sides. The only major stumbling block being regulatory (crash testing, etc...). Nobody in the industry wants that, so the best solution is to fight the EV adoption as long as they can. Had Tesla not been a company they would still be dragging their heels with compliance cars to this day.

Of course countries without existing ICE manufacturers to protect, like China, are free to take control of the EV market and dominate the auto industry in the coming decades. An existential crisis for legacy automakers.

theK3• 5 months ago

Its not only the automotive lobby to be fair.

Lobbies also moved Germany out of solar panel production, batteries and lately heat pumps.

So yeah, the legacy industry lobbies are the problem but not exclusively the automaker ones.

danmaz74• 5 months ago

Lobbies also moved Germany out of solar panel production, batteries

Was it lobbies, or costs which aren't competitive with China?

AnonymousPlanet4• 5 months ago

This is a very well researched essay regarding the solar panel industry in China and Germany: https://www.youtube.com/watch?v=QoCoPmtNRJo I really recommend watching / reading sober assessments like this.

This is the strategic decision that was the last nail in the coffin for European battery cell manufacturing: https://www.reuters.com/article/business/bosch-shuns-battery...

It is a rational assessment of realities when it comes to high end production. Not every industrial environment can produce every kind of industry. At some point the costs are too high to overcome the difference.

pkos983• 5 months ago

As a German, I genuinely cannot comprehend this short-sightedness and ignorance:

Our current Chancellor (Merz) publicly boasts that Germans work too few hours and calls on them to work more [0] implying this would generate more tax revenue. Yet working has arguably never been less rewarding for workers: Germany currently has the 2nd highest tax wedge among all OECD nations (≈48% for a single worker, nearly 13 percentage points above the OECD average) [2][3]. This is compounded by demand-side welfare measures for low earners such as Wohngeld (housing benefit) and pension supplements like Mütterrente ("Mothers' pension"), creating a massive redistribution from working people to non-working people.

Meanwhile, the German government has spent years failing to fully prosecute the CumEx/CumCum tax fraud scandal, a scheme through which banks and investors systematically robbed the German state of an estimated €36 billion in tax revenues [4][5]. The contrast could not be more glaring: squeeze workers harder while letting financial fraudsters off easy.

I've handed over my resignation for my FAANG job and am looking for a job in other countries as I don't see myself building a future here.

- [0] Merz urges Germans to work more CGTN (Feb 2026): https://news.cgtn.com/news/2026-02-28/Merz-says-Germany-must...

- [1] EUFactCheck Merz's claim rated "Mostly False": https://eufactcheck.eu/factcheck/mostly-false-we-need-to-wor...

- [2] OECD Taxing Wages 2025 Germany: https://www.oecd.org/content/dam/oecd/en/publications/report...

- [3] Tax Foundation Tax Burden on Labor, OECD 2024: https://taxfoundation.org/data/all/global/tax-burden-on-labo...

- [4] CumEx-Files Wikipedia: https://en.wikipedia.org/wiki/CumEx-Files

- [5] Stanford GSB CumEx and CumCum Scandals: https://casi.stanford.edu/news/germanys-cumex-and-cumcum-fin...

master-lincoln• 5 months ago

I've handed over my resignation for my FAANG job and am looking for a job in other countries as I don't see myself building a future here.

You quit your job at a large US company because you do not see yourself building a future in Germany?

imtringued4• 4 months ago

The Mütterrente is a good idea, because it rewards having children which end up paying the pensions. This leads to sustainable population replacement. If anything, this should be expanded to fathers as well (I don't mind mothers receiving more).

What's not such a great idea is paying the Mütterrente retroactively. Pensioners can't have children retroactively to stock up the tax base, so all this does is increase the tax burden for the current generation, which discourages them even more from having children.

realityking• 4 months ago

From the OECD report you cited:

In Germany, the tax wedge for the average single worker decreased by 5 percentage points from 52.9% to 47.9% between 2000 and 2024. During the same period, the average tax wedge across the OECD decreased by 1.3 percentage points from 36.2% to 34.9%.

Sounds like Germany is getting better.

AnonymousPlanet4• 5 months ago

That is a very popular opinion and I've held it too for a very long time. Until I read an issue [1] of The Economist in 2020 and did some digging afterwards.

Turns out, the real moat of any successful car industry so far wasn't brand recognition, lobbyists, tariffs, or the pleasing sound of a shutting car door. It's the combustion engine itself. Or rather the industry you're embedded in that provides the metallurgy and chemistry to reliably produce high quality engine blocks and seals. Because your engine needs to withstand high pressures and temperatures that go from below freezing all the way up to way over 2000K. And you also need the know how and experience to build all of that together.

None of that can be exfiltrated as a zip file or wished into existence by party officials.

The EV sidesteps all of that in one go. Now it's all down to who has the best batteries and who can do high quality assembly real cheap. Both points go to China.

Why? The same reason: The surrounding industry. It's what you get from doing (even simple) electronics for decades, cultivating a competitive industry for assembly and high quality battery cells.

The only hope for the incumbents was hydrogen instead of batteries because this again is engineering and seals.

The alternative would have been to become really good at batteries themselves. However, Europe's best chance to get there, Bosch, decided in 2018 not to go that way [2].

Once you let all of that sink in, you realise the inevitability of the current situation.

And they knew. All this time they knew. The rest was song and dance for politicians and shareholders.

[1] https://www.economist.com/technology-quarterly/2020/01/02/ch...

[2] https://www.reuters.com/article/business/bosch-shuns-battery...

twoodfin• 5 months ago

If the platform, power train, manufacturing is commoditized, shouldn’t that in theory be great news for existing brands with consumer trust and design competence?

whiteboardr4• 5 months ago

They didn’t know.

The reasonable approach to EVs becoming economically feasible would have been to cut through the noise and treat it as an add-on to the existing portfolio without compromising the core competence: internal combustion engines.

This they knew.

Dieselgate put them in a hopeless position in the discussion around all encompassing electrification demanded by the governent plus the greedy, short sited pressure from markets.

This led to massive (and forced) investments rushing out electric models nobody asked for by the dozens.

Compromising quality and a sound growth strategy along the way.

The worst possible timing for Dieselgate to hit - steering a whole country and all industry-related countries into an existential crisis.

It is delusional to think german car manufacturers will be anywhere near competitive in the much simpler EV mass(!)market - so thinking to order a whole industry, which is built around a way different technolocal foundation, to just make electric cars from now on without really looking into a viable charging infrastructure is still beyond me.

Plus ICE cars won’t be going away anytime soon and very few have the balls to call this out.

Grimeton• 4 months ago

At the beginning of 2010s Germany boosted a battery plant with 10 billion euros.

Three years later the car manufacturers sold the plant to China for another 10 billion...

CamperBob2• 5 months ago

If people don't want to buy the EVs they're forced to make, what's their next move, in your view?

JSR_FDED• 5 months ago

This word-for-word applies to the US car industry too. The Europeans would do well to see the current state of US car manufacturers as a cautionary tale.

thrance• 5 months ago

This is exactly what happened with a minor nitpick: the lobbyists and shareholders that orchestrated it obtained what they wanted (a quick buck) and got out unharmed, free to think about their next enterprise. The workers will be the ones to bear the cost, along with the environment.

Suckseh2• 5 months ago

China took over exports and manufactoring capacity 5 fold of what germany was doing in core industries: manufacturing, machine building and chemicals.

Its not just innovation, we missed and our stubbornes of just keep doing what we good at, its also china catching up and steam rolling us.

When I bought an EV, people around me told me the same thing and still do: they like the sound of engines, these EVs are not suitable for daily use, EVs will burn down, we hate renewable, we hate cables, we hate...

To match china, we would not only need to work a lot more, we would also need to work on saturdays, break a lot of labor laws we build up, reduce salary despite working more, reduce energy costs massivly and automate as much as possible.

A nitting machine from germany costs 60k. In china, with the same quality (because they catched up) is 20k. 20k!

And were i'm from (bavaria) most young man want to become Mechanical engineers because of BMW and co. No one wants to do IT (lets ignore the AI elephant in the room).

cactusplant7374• 5 months ago

Copy the model of ASML. Build something really complicated that no one else can easily copy.

doug_durham• 5 months ago

First what would that be? Second you can't sustain an entire country on one company

bluGill• 5 months ago

China is copying them though. They are still behind, but they are catching up.

norman784• 5 months ago

For that you also need to reduce the bureaucracy.

varjag4• 5 months ago

China buys the bulk of its precision machining capacity from Germany, Japan and Italy. Domestic designs are not up to snuff.

Suckseh2• 5 months ago

And thats no longer true.

There was an interview from a chines manufacturer and he said "5 years ago every machine was from europe, now all machines are from china".

eigenspace2• 4 months ago

Theyre rapidly moving up that value chain.

mg2• 5 months ago

    German chancellor Friedrich Merz ... 
    lashed out at German workers to
    “simply do a little more,”

Germany literally pays people to do nothing.

A friend of mine, an engineer who works in the German car industry, recently told me that nowadays he has a lot of free time. Because the company he works for has so few orders that the company is granted "Kurzarbeitergeld" - the government pays 60% of the salary if the employees work less.

That blew my mind. If I had fewer orders, I would work more to increase the quality of my product and my efficiency. Working less as a reaction to losing market share seems completely counterproductive to me.

niemandhier4• 5 months ago

That is true for RnD not for Factory workers. Germany has quite strong workers rights, so mass layoffs are not a possible solution to safe money if facing lacking orders.

Essentially companies get some of the money back they and their employees paid as taxes.

mentalgear4• 5 months ago

The problem is they don't get rid of their ICE cars any more - most of the world is transitioning to EVs and China - their previously biggest importer - has strict EV quotas and no one wants to buy German EVs that are too expensive and less capable than Chinese made EVs.

Germany was ahead in EVs and solar - both industries have been cuto off by conservative/free-market ICE lobbysts and these 2 huge global markets are now dominated by China instead.

alephnerd4• 5 months ago

has strict EV quotas and no one wants to buy German EVs that are too expensive and less capable than Chinese made EVs

Both China and the US have enacted trade barriers against EU originated auto drive goods.

A Chinese VW ID4 is manufactured in Shanghai and an American one in Tennessee. And that is the crux of the issue - consumers are still open to buying a German badged product, but it won't be "Made in Germany".

And where else can Germany export?

The individual EU states are protective about exports by leaning hard on nationalism and union support as seen in France (Renault+Stellantis) and Italy (Stellantis), India demands China- and US-style JVs and domestic manufacturing as well even despite the EU FTA, Japan and SK prefer buying domestic, Russia is blocked due to sanctions, ASEAN+Africa is flooded with Chinese, Japanese, and Indian manufactured cars already, and South American is flooded with Chinese, American, Japanese or domestically manufactured cars.

Germany Inc will remain in Germany as long as Germany makes itself attractive. Otherwise, they will leave, as they have already done so for the US, China, the CEE, and increasingly India.

pjc505• 5 months ago

The VW EVs aren't bad, apart from poor UX design, which they have realized.

oytis8• 5 months ago

Depends on your position I guess. If you are a worker at a conveyor belt, it doesn't make sense to work more to produce more cars nobody needs. I think originally this policy was designed to save jobs during temporary downturns, not to save industries going downhill

pc862• 5 months ago

If anyone can predict whether a downturn is temporary or an industrial shift you can make enough money to never work again.

ahartmetz3• 5 months ago

It makes sense for production line workers. Less so for R&D, but I've seen it affect R&D as well.

By the way, it's not 60% of the salary that the state pays - it's 60% of the difference in salary due to reduced hours.

maqnius• 5 months ago

Depends on where you work in the industry, there's a huge level of division of work. Upstream departments should work more on new products and marketing etc. But a little more downstream, there isn't much todo if not enough cars are ordered.

The intention of Kurzarbeitergeld is to prevent large layoffs. I honestly can't tell if that makes sense in the long run, but it seems reasonable for a political party trying to make it to the next term.

thi23• 5 months ago

Kurzarbeit is only available for a limited time and has the target to avoid layoffs resulting in much higher costs in unemployment payments.

throwaway_203576• 5 months ago

It's 24 months at the moment, which is way too long. A buffer period for companies to allow for necessary adjustments should be one quarter, max two.

ericol2• 5 months ago

When my eldest daughter was in high school (~2010, Argentina) there was a provincial policy where if every single student had a result below a certain score in a test, the scores had to be re assessed against the maximum result.

The resulting situation here was that she was constantly bullied into underperforming. Both cases are actually similar in that each individual has a personal incentive to underperform - the difference is that in your friend's case the policy is granted at the company level so no single employee can defect and break it for the rest, while in my daughter's case one high scorer could invalidate the reassessment for everyone, which is exactly what made defection punishable and the bullying emerge naturally.

ecshafer• 5 months ago

This is the natural result of "equity" which is the academic jargon term for "forced equality of outcome". High achievers are attacked. People who push us forward are demonized. The low achievers are never pushed to be better. And the average drops.

MichaelZuo• 4 months ago

Can you link a source for it? That sounds too absurd to be true…

atmosx3• 5 months ago

So let me get this straight: you have exactly one data point, and the second data point using is a German chancellor widely regarded as one of the worst by many measures. Right?

This is FUD. They said the same about the Greeks in 2008, it is complete BS. In any given org, passed a certain size you'll find ppl who slack a lot and people who work for three. Unfortunately that seems to the nature of large orgs, nothing special about Germans...

ps. I'm having a DejaVu. This is the exact same narrative Greek politicians used against the Greek population to justify them become poor overnight.

danans• 5 months ago

If I had fewer orders, I would work more to increase the quality of my product and my efficiency. Working less as a reaction to losing market share seems completely counterproductive to me.

That may work if you are a sole proprietor or small business person, but that's not how shareholder owned corporations work.

A sole proprietor is willing to work more if business drops (effectively lowering their compensation rate) because they are the beneficiary of any future gains that may (or may not) result from their short term sacrifice. If they want their employees to do the same they have to give them the same deal.

A large corporation can't easily make its employees work much longer for the same pay (except in the very short term), nor can it easily get shareholders to be OK with increasing spending on labor. This usually ends with massive layoffs when it can't sustain itself anymore.

That's one reason that smaller companies can be more nimble.

113• 5 months ago

If I had fewer orders, I would work more to increase the quality of my product

Really? Because most of the time what you see is huge layoffs and gutting the company's assets.

blks• 5 months ago

The worker who’s put on this reduced salary instead of being fired doesn’t have orders nor he has a product. He works for a wage.

riedel2• 5 months ago

Actually this is not as easy as it sounds. Quite a few companies opt not to go into 'Kurzarbeit' because it means that you go under extra scrutiny as it is only there to stop major layoffs, which would cost our social insurance system even more. There is typically enough mechanisms to make it unattractive enough, that even unions accept unpaid leaves instead. IMHO there is bigger productivity problems. After COVID sick leave has massively increased. Many women do not work as much as they want because child care is still sketchy. There is often simply no incentive to work more because engineering careers are quite limited: general pay compared to expenses is really good, but top performers earn considerably less than in other countries.

imtringued4• 4 months ago

How does this blow your mind? Your suggested action is illogical since the standard way to deal with this problem is to fire workers, but if demand is seasonal, it means you constantly have to fire and rehire, so instead of firing full workers, they just fire part of their working hours.

The crazy part is that the government subsidizes this, which creates perverse incentives, but that's a different problem.

zelphirkalt2• 4 months ago

You cannot indefinitely ask employees to do more for less money. According to law and job contracts you can only do so much unpaid overtime. Usually 10h instead of 8h, and only when justifiable. Everything else is illegal. Paying 60% and working less is hoping for the environment or situation at the market to change, whether or not that is realistic.

mg2• 4 months ago

However you look at it, sitting at home doing nothing is not the right approach for engineers to get their company back on track.

If there is no money to pay them, they should get shares in the company. So if their R&D is successful, they participate in the outcome.

ramboldio• 5 months ago

A very key problem is the common narrative that green policies and the EU allegedly caused the downfall of the car industry (-> "Verbrennerverbot").

In reality, a way bigger impact seems to be that the Chinese govt stopped buying German cars once they could build their own (which they have been always transparent about).

Unfortunately, this misdiagnosis leads to the wrong conclusion to double-down on a obsolete business model of the car industry, instead of diversifying away from it.

Tade02• 5 months ago

This. China is a much larger economy and by far the single largest car market in the world - selling more vehicles domestically than the EU and USA combined.

That being said just like Germany they're largely export-oriented and if local demand ever weakens, they'll struggle all the same.

jansan• 5 months ago

It's both. Of course the massively shrinking share of the Chinese market is a big chunk of the problem. But the whole mindset here in Germany is completely delusional with the idea to be leaders in environmental technology and sustainability solutions.

My favorite example of this delusion is Porsche who somehow thought that selling their bread-and-butter model Macan exclusively as an EV was a good idea. I still cannot understand how they arrived at this decision.

throwaway_203576• 5 months ago

What would the appropriate strategy have been after realizing China had decided to squeeze foreign cars out of the market? The "obsolete business model" still sells many cars world-wide.

aurareturn• 4 months ago

Maybe recognize that China needed energy independence and that they needed to turn to EVs? Designs and sell cheap EVs in China?

Tesla is a top selling car brand in China.

svara2• 5 months ago

How large a demand for cars does the Chinese government have do you think?

niemandhier4• 5 months ago

There is little the US could have done more to harm Europe and Germany in particular than engaging in the Iranian conflict. Qatar was supposed to be the replacement for lacking Russian deliveries.

In addition the current government is pro fossile fuels, and parts of it are the same south germans that keep building natural gas power plants.

Those plants play an important part in driving up electricity prices in the whole country, since the same people that insist on using natural gas also refuse to split the country into electricity price zones.

alephnerd4• 5 months ago

You could have invested in nuclear instead of adopting a broadly popular anti-nuclear policy.

The EU could have also enforced the JCPOA as one of it's guaranteers but decided to be inward facing instead of treating the 2014 invasion of Ukraine as the wake up call that it should have been.

We have been saying for almost 20 years that we in the US are shifting East, but Western and Northern European states like Germany did nothing to prepare for such a world.

At least the French establish military bases, conduct coups, and attempt to project hard power abroad in order to protect their interests.

niemandhier4• 5 months ago

About 40% of the uranium used in Germany came from Rosatom, either directly from Russia or from Kasachstan.

That would have helped us to reduce co2, but not to get independent from Russia.

Also: Natural gas is used heavily in chemistry and the steel industry, electricity alone does not help, although I admit not raising the point in the previous comment.

sofixa4• 5 months ago

The EU could have also enforced the JCPOA as one of it's guaranteers but decided to be inward facing instead of treating the 2014 invasion of Ukraine as the wake up call that it should have been.

Is this about JCPOA or the 2014 occupation of Crimea?

JCPOA was being enforced by its EU members, but when the US pulled out, it fell apart. EU based companies couldn't continue to take part of the lessened restrictions because of the fear of direct US sanctions on them, which made Iran mostly uninterested in continuing its participation. It was entirely the fault of the US.

pmarreck• 5 months ago

To quote my 4.5 year old son:

"Daddy, look, another stinky gas car!"

The kids already know it.

ShellackGobln7• 5 months ago

The thesis here is that Germany is suffering because they didn't out-compete China on EVs? Really?

Maybe these writers should go invent a new battery! No amount of German Engineering is going to beat the costs of Chinese scale.

axegon_• 5 months ago

I have some experience with the German automotive industry (having worked at a company that is a service provider for much of the German giants), I can instantly confirm a few things, which are known by some and suspected by most:

Historically VW has been the "people's car" - a good car that people could afford and for the longest period that was the case: affordable and rock-solid. Around the late 2000s, that changed. VWs are no longer affordable and when problems hit, they hit hard - they are both time consuming and unless covered by a warranty, expensive. Also hard to fix even if it's something simple. That problem is cascading down the entire VW Group and it is hurting everyone along the way. Some companies under the VW Group are hit very hard by this. At the same time, the second big player, Mercedes, was never really affordable but lately their image of a tank-solid machine has cracked, suffering from a similar, brutally over-engineered, unmaintainable, engineering maze as VW. BMW is in a similar state as Mercedes but with a slightly different twist: BMW's are not to everyone's taste and I am saying that as an owner myself. But these days even the most die-hard fans acknowledge that the modern designs are absolutely atrocious. Top Gear were making fun of the Porsche Panamera back in the day but looking at new BMWs, I'd pick the Panamera in a heartbeat. In addition to their hard push for anti-consumer practices and outrageously over-engineered solutions.

All of this has painted German cars in a negative way - expensive and finicky. Most of the customers were happy to pay a higher price for quality and creature comforts but there is a line between comfort and something dumb like having to visit a mechanic in order to swap a dead battery - something which should have been a simple operation that you can do on the side of the road if it comes down to it. And even though I am happy with my current car and I don't plan on changing it anytime soon, if I were in the market for a new car, I'd definitely consider other options, knowing what I know.

My suggestion to the big-3 which will start solving problems: KISS.

arethuza• 5 months ago

About 20 years ago I can remember a German colleague describing the quality of engineering by Mercedes as a "national disgrace". I wonder what he thinks now!

chewz• 5 months ago

Agreed. No plans to buy German car anytime soon.

Towaway693• 4 months ago

Not forgetting the VW "Abgasskandal"[1].

Fake it 'til you make it, I guess. Or in this case make it fake 'til you fail.

[1]: (de) https://de.wikipedia.org/wiki/Abgasskandal (en) https://en.wikipedia.org/wiki/Volkswagen_emissions_scandal

thi23• 5 months ago

I've mostly worked in smaller companies (max 250 employees) and recently joined one of the larger corporations (not automotive related).

The main issue I notice is how bad the communication is and how little can be done & decided. Before deploying a new Jenkins pipeline I need to speak to two different teams. It's insane how much time is lost doing meetings and syncs.

delichon• 5 months ago

Before deploying a new Jenkins pipeline I need to speak to two different teams

It doesn't sound excessive that there would be two teams using a Jenkins pipeline that would need to be consulted.

thi23• 5 months ago

Maybe deploying was a bad choice of wording, I'm talking about setting up a new pipeline, for my repository with an internal tool. I need to speak to two different teams to ensure my CI/CD jumps through all the necessary hoops.

Towaway693• 4 months ago

Totally the same experience. And then everyone is expected to work on weekends because that deadline that was missed four times before definitely needs to be done by this weekend. At least until it gets missed for the fifth time.

rramon• 5 months ago

Germany could turn it around with laxer laws about permanent residency and new infrastructure. Allow people to live permanently in mobile homes, vans and caravans which they can rent to won from automobile makers, invest in campsites. The good future imo isn't megacities but distributed cities with families and social circles congregating.

mingusrude• 5 months ago

I don't think trailer parks is how most people envision the future for a leading European country.

fnord77• 5 months ago

sounds like "live like the homeless"

Bitter german winters would make living in trailers miserable

slaw• 5 months ago

Isn't it easier to fix housing issue and build more apartments?

joegibbs• 5 months ago

Let in lots of immigrants who can live like the homeless? I don't think that would help their economy.

baggachipz• 5 months ago

Looks like they're taking a page right out of the USA playbook: Chase quarterly profits at the expense of the future, enrich large investors via stock buybacks, lay off workers, and rely on the government to subsidize the behavior. Probably not the model to emulate, but here we are.

tsss3• 5 months ago

Germany is a country that never moved past 1918, both in technology and society. All the successful industry is from that time and the mindset is too. They may have gotten rid of the Emperor but the top-down government and Prussian subservience are strong as ever. It's no coincidence that the GDR was even more controlling than the Soviet Union and crashed even harder. The German federal republic, too, is turning more and more into a paralyzed command economy. The entire public sector, health care, and all large corporation certainly work that way and it is the reason for their unfathomable inefficiency.

Ignoring EVs is a symptom and not a cause of the problems. It is impossible for these corporations to pivot or innovate, no matter in which direction.

intalentive• 5 months ago

Where is Germany going to get the fuel to power an ICE fleet? Where is Germany going to get the electricity to power an EV fleet?

Germany faces much bigger problems than the auto lobby.

markus_zhang• 5 months ago

I don’t know what the German carmakers are going to do, but I’m wondering if they should put eyes on some Chinese EV carmakers that are going to go defunct — quite usual in Chinese manufacturing philosophy, and buy them cheap. Then they can use the tech to export cars back to EU.

tsss3• 5 months ago

They would just smother whatever is left of the Chinese company with their overbearing management.

amai2• 5 months ago

China will not allow that. China is not as stupid as Germany and allows critical companies to be sold to the competitor. As an example, see

https://www.freshfields.com/en/our-thinking/case-studies/mid...

chmod775• 5 months ago

Having ideas is difficult and expensive. Let's lobby instead!
[..] spends around €10 million a year on lobbying – which sounds like a lot, but amounts to just 0.05% of VW's €21 billion R&D budget.
The logic is clear: innovation is expensive and uncertain, whereas lobbying to keep current products on the road is cheap and reliable.

Complete non sequitur. This could more easily be read as "they don't care much about lobbying and are hard at work doing R&D instead", but then that would go very much against narrative the author is trying to spin for us here.

Also I distinctly remember industry voices being very much pro-electric, while it was dinosaur politicians fetishizing ICE cars and fighting to keep production going, long past the point VW even wanted to focus on them.

I don't think this one was a lobbying problem for once.

enopod_• 5 months ago

This. VW actually invested a lot into EVs and now they’re outselling every other EV maker in the European market. Mercedes and BMW also invested a lot. All of them have brand new and pretty competitive EV platforms. Heck, even Peugeot make decent EVs. The only manufacturers lagging behind at this point are the Americans. Tesla basically stopped investing into EVs and their tech is outdated, in Europe they get absolutely butchered by VW and in China they‘re only able to keep sales level because the market is growing so fast. But soon Tesla will get annihilated in China too. Other US car makers that build EVs on scale are nowhere to be seen, besides maybe Rivian.

adverbly• 5 months ago

"The engine of X's wealth is blocking its future" is a pretty common theme these days...

Pensions, patent/IP law, land ownership crowding out affordability...

Birth rate drops dramatically

Shocked pikachu face

ch4s32• 5 months ago

You see low birth rates in places with relatively affordable cost of living and high levels of economic opportunity.

joe_mamba13• 5 months ago

Like which places?

grigio• 5 months ago

EU destroyed all its industries (Olivetti, Ericsson, Nokia,..) and automotive isn't an exception

sofixa4• 5 months ago

The EU didn't have anything to do with the destruction of any industry, really. And especially none with Nokia?? Terrible product decision making destroyed Nokia's consumer business, not the EU. But Nokia and Ericsson are still there and quite strong in networking. You just don't see them because they're not consumer oriented businesses.

Also, there are many industries still flourishing across the EU. Airbus, Renault, Zeiss, ASML, ThyssenKrupp, Saint-Gobain, Nestle, Siemens, Sanofi, IKEA, Inditex, Schneider Electric, etc etc etc.

throwaway_203576• 5 months ago

Problem is: this list gets shorter every year, without any new additions in the recent decades (!)

mna_• 4 months ago

Nestle is Swiss, not EU. Also they're quite an immoral company. I wouldn't put the word "flourishing" near Nestle.

steviee• 5 months ago

It would be great to see a politician as angry about lobbying as Merz is about work-life balance.

Love it! Merz (and our minister of commerce Reiche) is a desaster for Germany and all of Europe. Tump attacks Iran and Gas prices hit 2,12€ (and even more) per liter and still they think betting on fossil fuels from their dictatorship-friends is a good thing.

Saving Earth is just not cost-effective (at least not for the "right" people).

TYPE_FASTER• 5 months ago

Everybody underestimated the ability of Chinese auto manufacturers to come up to speed. In a recent interview with the CEO of Ford he said something similar.

amai2• 5 months ago

„The logic is clear: innovation is expensive and uncertain, whereas lobbying to keep current products on the road is cheap and reliable…. Following this logic, German firms will keep pushing for carveouts instead of innovating, and catching up will become impossible.“

Nostalgia is not a strategy!

tsoukase• 5 months ago

Everything that is happening now in the world was completely known and predicted since the 90's (energy and demographic crisis, China's rise, even decline of the West). Large projects were designed and implemented to combat these (with names in Germany like Innovation, Leistung, Kompetenz). But the results weren't enough and only mediocre.

In a nutshell: Germany, like almost all of Europe, cannot innovate, not only in IT but in any intelligence-intesive sector. We will remain stuck in traditional industries and hope at least to reduce our dependency on the US. Hopefully, this last need will help Europe keep its domestic market and maintain its quality.

pingou• 4 months ago

"In Germany, cars are a feature of national identity and symbol of affluence."

I didn't get the impression that cars were more a symbol of affluence in Germany than in other countries. I would have said they are less a symbol of affluence than in the average country.

BrandoElFollito• 4 months ago

In France for instance a car is a mean of transport and people in average do not care about cars at all. This is why we have a lot of generic small sized cars, with bumps or scratches.

A company car is not a typical perk, as opposed to, say, Poland where it is an important element.

The engine of Germany's wealth is blocking its future

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