Study by Agora Verkehrswende and BCG on the ramp-up of electromobility in Germany / Gap of 6 million electric vehicles under current conditions / More speed through the involvement of Chinese manufacturers according to common rules
Berlin — In order to achieve the goal of 15 million electric cars by 2030, Germany as an automotive location is dependent on a package of measures from the federal government and on Chinese manufacturers. With its current course, Germany will miss the target by around 6 million vehicles. This is shown by a study by the think tank Agora Verkehrswende and the strategy consultancy Boston Consulting Group (BCG), which analyzes the framework conditions for the ramp-up of electromobility in Germany in international competition. Higher import tariffs on electric cars from China would therefore lead to higher prices for customers and endanger the competitiveness of the German automotive industry.
“Anyone who wants to achieve climate targets and secure Germany’s position as an automotive location in the long term should work for a rapid ramp-up of electromobility with the involvement of Chinese companies,” says Christian Hochfeld, Director of Agora Verkehrswende. “That may sound paradoxical at first glance, but a rapid structural change to electromobility also contributes to greater sovereignty and competitiveness vis-à-vis China. The development of European value chains for batteries makes us less dependent on China’s dominant market position. The rapid establishment of Chinese companies in Europe according to common rules creates more added value than imports. At the same time, this offers the opportunity to catch up on development gaps in technology areas such as batteries through cooperation. Import tariffs or even further isolation from China would entail hardly calculable risks for German companies. Especially in the area of low-priced small vehicles, Chinese products can help accelerate the market ramp-up for electric cars in Europe. The federal government and the EU should take this into account when negotiating import tariffs on electric cars from China.”
According to the authors’ calculations, in a scenario that allows the 15 million to be reached by 2030, Chinese manufacturers will have a market share of 15 percent of the electric car fleet in Germany. This corresponds to around 2.2 million vehicles, especially in low-price segments. If tariffs were increased by 20 percent, the market share of Chinese manufacturers would only be 11 percent in 2030 and Germany would miss its 15 million target by at least 1.3 million vehicles, even if the federal government simultaneously takes far-reaching measures to ramp up the market for battery-electric cars.
Pull all political and economic levers
Using a target achievement scenario, the study shows that the 6 million gap can only be closed by 2030 if all political and economic levers are pulled. Economic incentives that make electric cars cheaper and combustion vehicles more expensive are possible, for example, through vehicle tax and company car taxation. The vehicle tax could start at the time of first registration and be more closely aligned with CO2 emissions . In regulatory law, instruments such as quotas for manufacturers and commercial fleets are available to increase the market share of electric cars.
In the target achievement scenario, a vehicle tax reform and a quota for commercial fleets were modeled as an example. This will lead to a total of 4.2 million additional new registrations of electric vehicles by 2030: 1.1 million private and 3.1 million commercial. The faster expansion of the charging infrastructure would lead to an increase of around 0.3 million electric cars. Similar effects could also be achieved through other combinations of incentives and regulatory law, but these bundles of measures are not sufficient to close the gap. This requires greater involvement of Chinese manufacturers. According to the target achievement scenario, this is the only way the number of electric cars in Germany can be increased by a further 1.5 million to a total of 15 million by 2030.
Kristian Kuhlmann, co-author of the study and partner at BCG, says: “To achieve the 15 million target, well-coordinated regulatory initiatives are necessary. The industry needs reliable framework conditions and thus planning security. Punitive tariffs lead to uncertainty among investors, consumers and manufacturers. The latter should concentrate on bringing an attractive and internationally competitive range of electric cars onto the market.”
Securing employment and reducing costs
In terms of employment effects, the study’s target achievement scenario offers significantly better prospects in the medium and long term – despite major changes brought about by the transformation. By 2030, the number of jobs in the core automotive industry will fall by around eight percent compared to today. At the same time, new jobs will be created in adjacent industries, for example in battery production, renewable energies and charging infrastructure. However, this also brings with it a great need for training and further education. If the combustion engine is retained for a longer period and electromobility ramps up more slowly, significantly higher job losses in the core automotive industry can be expected in the long term.
The study estimates the overall economic financing requirement for achieving the 15 million target by 2030 at 45 to 65 billion euros: for additional purchase incentives, compensation for additional costs and charging infrastructure. The exact amount of financing required and how it is distributed between the state, manufacturers and consumers depends largely on the design of the specific package of measures. Without a change of course, significantly higher costs would probably arise even after 2030: for the loss of market share and jobs, for declining economic power and tax revenues, for compensation payments and penalties for violating international climate protection agreements and for damage caused by the consequences of global warming.
Christian Hochfeld: “The example of the automotive industry shows how closely industrial and climate policy are now linked. The future will be electric – this is good for the climate and for Germany as an automotive location. But we will not get to this future by just talking things through. E-fuels and hydrogen are not a real alternative in the passenger car sector. But lengthy public debates about this are already preventing customers from switching. What needs to be done is obvious. Consistent action is now needed from all players. 15 million electric cars by 2030 and climate neutrality by 2045 require a rapid and forced switch to electromobility. It will never be as cheap as it is today – and it is probably the last chance. What are we waiting for?”
