VM Interview Uscale: "China has leapt far ahead - extending combustion engines or lobbying won't help"

VM: Mr. Sprenger, the electromobility in Germany feels like a rollercoaster ride and isn't making progress. Why is the market for e-cars in Germany stuck?

Axel Sprenger: Yes, the electromobility market is currently going through a difficult phase. The ecological-political pressure to ramp up electromobility to 15 million vehicles by 2030 is enormous. To achieve this, German car manufacturers simply started too late to seriously engage in developing e-cars. This time is now missing. Additionally, cars are emotional products.

This attracts populists, even in politics, who have significantly caused uncertainty and thus harmed the entire industry.

At the same time, it must be recognized that the development of major changes is never linear. There are positive leaps, but also negative shifts. We see this in the prices of e-cars, the development of sales figures, and also in the prices at charging stations. There is anything but a stable development. In addition, technology is making great leaps and is continuously improving. Customers notice this and hold back.

After the pioneers and the early adopters, i.e., the customers who switched to an e-car very early, the mass market is now following, for which new rules apply. The dip in the ramp-up after about a 17% market share is normal for any innovation.

In the professional literature, this transition has been extensively described under the term "Crossing the Chasm" by Geoffrey Moore. This model can explain the current situation of electromobility well. However, this is of little use to those who work and invest in the industry. They find it difficult to remain relaxed when their investment calculations no longer add up, liquidity comes under pressure, and not a few companies file for bankruptcy. That is really challenging and dims the mood of the entire industry.

When politics involve constant back and forth, 2040 or 2045, electric or e-fuels, subsidies yes or no, it is not only annoying for market participants but also dangerous.

In recent years, car manufacturers and charging technology providers couldn't meet the high demand. Then the supply was there, but with the sudden end of subsidies, the demand collapsed abruptly. This makes it extremely challenging for managers to steer their companies through the ramp-up calmly. With the magnitude of the investments and the enormous time pressure, the transformation becomes a real hell ride. You can only build a factory once. If you bet on the wrong model, it gets very, very tight very quickly. 

VM: The situation is now also so critical because the international market is very alert. News from China has shaped the year. How do you assess the role of the Chinese in e-mobility?

AS: We need to distinguish between two things in the discussion: one is the performance of Chinese manufacturers in the German market. The other is the success or failure of German manufacturers in China.

If the electric models of German manufacturers do not convince in the home market, how should they do so in China, a market that is several years ahead in terms of technology and pricing?

No shifting of the so-called combustion engine ban helps, nor does EU lobbying. China has leaped far ahead. It is not enough to integrate the karaoke feature, which is so popular with Chinese customers, into the entertainment system. As long as German models cannot keep up with the core issues of electric driving and charging, they lose in China and the European market. This is a double problem.

At the same time, the Chinese are also making mistakes in the German market. We have seen several Chinese manufacturers trying to establish themselves in the German market in recent years. This has not yet been successful.

Our studies show that Chinese cars are still not convincing because they either do not deliver what German customers expect or because they are anything but cheap. In addition, many Chinese manufacturers try to enter through the premium segment, which is particularly difficult in the German market. What Chinese suppliers continue to underestimate is the relationship of German car buyers with dealers and their workshops. Tesla's largely digital sales concept is not infinitely repeatable. Therefore, many Chinese brands are now working with large European dealership groups, which will be more successful. This way, the new brands can build the crucial trust.

The German market has always been considered the most difficult car market in the world. To believe that you can sell off your surplus production in Germany is a mistake. With NIO and BYD, the first brands are now showing that they are serious, that they are willing to take the time and engage with the German customer.

VM: Let's take a look at the charging infrastructure. There has been a lot of movement here recently. How do you assess the development in Germany?

AS: There are more and more fast-charging parks along the routes. The construction of fast-charging hubs in the cities is progressing, but it's more difficult because space is scarce. Therefore, the expansion is happening through supermarkets, other retailers, and gas stations. The same applies to employers who are setting up charging spots for employees and electrifying their fleets. From our perspective, the expansion of the charging infrastructure is progressing as expected.

The development of roaming fees was surprising. They have become so high that customers are switching back to multiple contract partners or preferring charging providers with large supply networks.

The background to the increase in roaming fees lies in the high investment costs. Because the sales of electric cars are stagnating, the utilization of the infrastructure is falling short of expectations. This significantly burdens the calculation models and has led providers to increase roaming fees. For public charging, this is counterproductive, as prices have partially risen significantly, thereby also slowing down the ramp-up of electromobility.