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Old 24th February 2020, 22:05   #1
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Default Are electric cars slowly pushing Germany into a recession?

https://www.ccn.com/tesla-is-slowly-...nto-recession/

The sweeping electric car pivot that's being led by Tesla is starting to have an impact on Europe's biggest economy - Germany, by striking at its backbone, the automobile manufacturing industry.

- Germany is on the brink of recession after growth slowed to zero in the last quarter.

- The economy is being dragged down by a seismic slump in car manufacturing.

- The Tesla effect – and the shift to electric vehicles – is leaving Germany in dire straits.
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Old 24th February 2020, 22:28   #2
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Default re: Are electric cars slowly pushing Germany into a recession?

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Originally Posted by gupta_chd View Post
The Tesla effect and the shift to electric vehicles is leaving Germany in dire straits.
Adding to that, the company is clearing huge swathes of forest - nearly 150 soccer fields in size - to build the factory right in neighborhood of VW and BMW.
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Old 24th February 2020, 22:37   #3
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Default Is Tesla Killing Germany's economy

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Germany's economy is on the verge of recession as its illustrious car making industry is going through the toughest time since WWII. Its auto industry has hit a 22 year low with millions of jobs at risk and some experts say that Tesla is the reason behind this downfall of Europe's largest economy.


Tesla has been the forerunner in EV technology and is solely responsible for the ongoing EV movement in the current automotive scenario. When Tesla launched the Model 3 in Europe last year, it outsold rival sedans from BMW and Mercedes and with current trend, the chance of it changing is even bleak. The biggest problem I believe is that Tesla got others off guard as nobody expected EVs to become so mainstream in such a short span of time. Not just German brands but no car manufacturer in the world has a single model that can challenge Tesla at the moment. Just take a look at how the others are beaten by Model 3 alone.

Are electric cars slowly pushing Germany into a recession?-germanypluginvehiclesalesseptember2019.png


Tesla is outselling all major German rivals in US and in Europe quarter after quarter.
Are electric cars slowly pushing Germany into a recession?-teslavsluxurycarcompetitionq22019.png
Are electric cars slowly pushing Germany into a recession?-teslamodel3sales.png
Are electric cars slowly pushing Germany into a recession?-q4-sales.png


The latest economic figures of Germany shows zero growth for the fourth quarter. Reuters compared the threats faced by Germany with that of Detroit in 1970s when rapid decline in auto industry destroyed the entire city. Job cuts will take place not just in the auto majors but at supplier levels as well like Bosch, Michelin etc. Volkmar Denner, CEO of Bosch, was quoted saying "It could well be that we have passed the peak of automotive production." Elon Mask is now readying a Tesla gigafactory in Germany itself and has recently got the courts approval. Related thread (Tesla to build Gigafactory in Germany)

Problem is electric cars don't require huge workforce and provide less assembly work than combustion engine vehicles. Demand for Tesla vehicles in markets like China is soaring while demand for Germany's cars has declined for 17 months straight. All these point directly to the fact that the market worldwide is heading to the EV revolution and it's something that will end automotive sector as a major employer.

In the Indian scenario, while our economy or workforce is not hugely dependent on the automotive sector like that of Germany, when the inevitable will happen, what will be the consequences of our relatively small automotive manufacturing sector that employs lakhs of people. I believe EVs will not catch up in India like it did in the US or Europe due to lack of infrastructure. But when it will come, it will swipe away a big chunk of employment in our society when our country is already witnessing a big slowdown and unemployment.


Image courtesy: Google

Last edited by SDP : 24th February 2020 at 23:31. Reason: Merged with existing thread
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Old 24th February 2020, 22:49   #4
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Default re: Are electric cars slowly pushing Germany into a recession?

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Originally Posted by AltoLXI View Post
Adding to that, the company is clearing huge swathes of forest - nearly 150 soccer fields in size - to build the factory right in neighborhood of VW and BMW.
So then, VW / BMWs loss is Teslas gain. In the bargain, Germany should not loose? As all three companies will be in Germany.
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Old 25th February 2020, 00:25   #5
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Default re: Are electric cars slowly pushing Germany into a recession?

Clearly its high time Germans realised that they need to develop EV's and that is also better than Tesla. Theyre no less different than our Indian companies who wait till the last day of BS 4 deadline and then say we still have stock to sell. Why wait when you know that its EV time. Wake up BMW !! Wake up Audi !!
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Old 25th February 2020, 00:34   #6
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Default re: Are electric cars slowly pushing Germany into a recession?

There was a tear-down done on a Tesla, and they found tech 6 years ahead of that in existing car manufacturers EV's. This is the basic problem. None of them are fully committed to electric cars and haven't invested in the latest technology, which explains why Tesla's cars have better range and performance.

The truth is change is inevitable. If car companies can't adapt to the new changes in technology they deserve to die. The sad side-effect of this is unemployment, but that is a necessity. I hope car companies evolve, otherwise they will face the fate of companies like Kodak and Nokia.

Yes, EV's need less man-hours to build and maintain a vehicle, but isn't that a good thing. We are able to manufacture vehicles more cheaply and efficiently, freeing up people for other jobs.

Last edited by vb-san : 25th February 2020 at 06:30. Reason: typo
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Old 25th February 2020, 06:38   #7
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Default re: Are electric cars slowly pushing Germany into a recession?

The problem is they (Germans) tried way too hard with the clean-diesel campaigns and highlighting on low CO2 emissions, only to get a slap on the face with numerous diesel-gate scandals. They should have got at least taken a cue from how Scandinavian countries were jumping into the EV bandwagon. That said, I feel the big Germans still have the financial might to build something in this space and compete.
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Old 25th February 2020, 09:56   #8
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Default Re: Tesla is slowly pushing Germany into recession?

Let's be honest, very few must have expected Tesla to strike it big, and strike it big this fast. It was maybe Musk, not even Tesla per say. Until Mr. Musk came along, the German Three had a well established cash cow that gave them no reason to challenge status quo.

Tesla, being comparatively significantly small and having a radical leader at helm, could adapt and pivot as necessary. No one gave it much grief when it kept missing production targets. The same wouldn't be possible for behemoths such as the Germans which can't be agile enough. BMW has had the i3 and i8 but they made them halo products and could never be mainstream.

All this doesn't absolve the Germans of not preparing for change though. Tesla coming in won't necessarily offset the anticipate slow down/job less at the German manufacturers so it's all the more reason for them to really innovate and fast.
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Old 25th February 2020, 09:56   #9
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Default Re: Are electric cars slowly pushing Germany into a recession?

Title changed to "Electric Vehicles" instead of just Tesla.

I think the article is a bit premature. EVs still constitute a tiny percentage of most large markets. Yes, they are coming, but by the time that EVs gain volumes, the German car industry will have offerings too. They have ample time to catch up & many have already rolled out their first round of EVs (Audi e-Tron, Porsche Taycan).

Yes, the German car industry is going through tough times, but that's because of the car market overall seeing major challenges at the macro level.
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Old 25th February 2020, 10:13   #10
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Default Re: Are electric cars slowly pushing Germany into a recession?

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Originally Posted by GTO View Post
Title changed to "Electric Vehicles" instead of just Tesla.

I think the article is a bit premature. EVs still constitute a tiny percentage of most large markets.
Though EVs are a tiny percentage, the percentage is significant in the segments the Germans have operated in. That I think is the major reason they are hit hard.
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Old 25th February 2020, 11:32   #11
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Default Re: Are electric cars slowly pushing Germany into a recession?

Watch this documentary on the subject. It is almost 30 minute long. Please note Govt/Policy makers comments (19:16 min onwards and towards the end).



China, USA changing direction - Both are major markets for German automakers.
Countries within Europe making major shifts (e.g. Norway)
German domestic market is small for them

What do they do now? No wonder companies like VW refocussing market like India to sell their Diesel/Petrol powered cars now. They cannot compete with Indian companies when it come to price and they are redesigning (read cost cutting) their cars before launching here. They are slow in even executing this plan when companies like Hyundai, MG, and Tata already launched electric cars in Indiaat 25L, 20L, and 15L price range respectively.
Many other electric cars are scheduled to be launched this year and next.

It is going to be tough for export depended economy like Germany for sure. It is going to hurt them bad if they do not act fast and it is already started happening. Tesla setting up plant in Berlin is the result of their own actions and it hurt them bad. Let us see how fast Tesla can start their operation in Berlin. I expect lots of bureaucratic/labor related hurdles for Tesla in Germany.

Last edited by Latheesh : 25th February 2020 at 11:46.
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Old 25th February 2020, 13:13   #12
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Default Re: Are electric cars slowly pushing Germany into a recession?

I would not call it fake news, but it is not correct either.

The problems car manufacturers are facing are due to many factors, electric cars being one. But certainly it is not Tesla pushing Germany in recession. Germany is facing many challenges. The challenges in the car industry are more around total global demand which has taken a massive dip. The competition of Tesla is compared to that effect a fairly small add on effect.

The automotive is a truly global industry, so looking a particular country on a arbitrary segment level and draw conclusion as to what the impact of Tesla is on Germany.

Germany relies heavily on export, not just cars, although that is a sizeable chunk. But they manufacture and export so much more. And their exports across the board are down due to several reasons, way beyond the Tesla effect. (E.g. trade war, trade restrictions, big economies such as China shrinking, Brexit etc)

http://theconversation.com/eight-cha...cession-123284

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Old 25th February 2020, 15:41   #13
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Default Re: Are electric cars slowly pushing Germany into a recession?

Wouldn't Tesla's factory and worker (at the proposed gigafactory) income contribute to the German GDP?
So how does EV push Germany into recession?
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Old 25th February 2020, 16:36   #14
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Default Re: Are electric cars slowly pushing Germany into a recession?

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Wouldn't Tesla's factory and worker (at the proposed gigafactory) income contribute to the German GDP?
Technically no. Tesla is registered in US and revenues would be reported in their US balance sheets. Germany only stands to gain on employment. This, unless Tesla has made a local legal entity and reports that earnings in Germany.
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Old 25th February 2020, 16:49   #15
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Default Re: Are electric cars slowly pushing Germany into a recession?

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Technically no. Tesla is registered in US and revenues would be reported in their US balance sheets. Germany only stands to gain on employment. This, unless Tesla has made a local legal entity and reports that earnings in Germany.
Two very different things: Legal entities / report financials.

Tesla does have its own German Legal entity. Giga Berlin. It is wholly owned by Tesla Inc, USA. Giga Berlin operates and is bound by all relevant German laws (tax, labour, etc.)

Tesla (or anybody for that matter) can not operate in Germany without a formal legal entity. Where and how the revenues and profit/losses (or parts thereof) gets reported is a different matter altogether.

With operations in parts of Europe, including in the Netherlands, Tesla might consolidate their European operations via the Netherlands for instance.

I tried to find out a bit on what the financial set up of Tesla, globally, looks like, but I havent found it yet.

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