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  • For Germany it's the end of an era

  • And as Europe's biggest economy...

  • ...there are some huge challenges ahead

  • From its increasingly complex relationship with China...

  • ...to climate change

  • All eyes will be on how Germany's new leaders...

  • ...grapple with these issues

  • But there's one German industry that reveals a lot...

  • ...about the country's prospects

  • Its cars

  • Traditionally, the car industry here has been very powerful

  • There have been open doors to German ministries, to the chancellery

  • Germany's car industry is a vital part of its economy

  • With links to government that go back decades

  • How this world-renowned motor industry...

  • ...navigates the challenges ahead could tell you more than you think...

  • ...about Germany's future

  • The curves

  • ...the precision

  • It's cutting-edge engineering like this that has helped place...

  • ...carmakers at the heart of the German economy

  • And the industry has proved a bellwether...

  • ...for the country's future prospects too

  • Since the 70s...

  • ...car exports have risen with Germany's wealth and influence

  • Manufacturing is incredibly important in Germany

  • It represents around 18% of GDP

  • And of course, the car sector represents a very large part of that

  • It's not quite, you know, where the car industry goes...

  • ...Germany goes, but the sector is absolutely crucial...

  • ...to the future of Germany and the future of its industrial model

  • But that industrial model could be under threat

  • After over half a century of global dominance...

  • ...German carmakers are now playing catch-up

  • And it's not just the car industry that's losing ground

  • In 2000...

  • ...seven of the world's most valuable companies were German...

  • ...but in the past two decades, that number has fallen to just three

  • How Germany's carmakers attempt to claw back global market share...

  • ...could be telling for the economy as a whole

  • Take international relations

  • Almost half of Germany's GDP comes from exports

  • Cars make up the biggest proportion of this

  • Who Germany sells cars to matters

  • It can point to alliances or trouble brewing

  • Since 2016 China has been Germany's biggest trading partner

  • In 1998, German trade with China was worth $16bn...

  • ...now it's worth over $180bn

  • But there's a fear that Germany...

  • ...could have become too reliant on the Chinese market

  • For the past 16 years, Angela Merkel has courted China...

  • ...in the name of trade

  • It's an approach that has its risks

  • Particularly now, we're in this context of this emerging systemic competition...

  • ...between America and China

  • At least for some people, there is a worry...

  • ...that putting all of your eggs into the Chinese basket...

  • ...might leave you exposed to some of the ill winds of...

  • ...geopolitics and geoeconomics...

  • ...that might be heading Germany and Europe's way in the coming years

  • There is a strong sense that...

  • ...Germany's China policy is going to have to be recalibrated...

  • ...basically on pretty much every single front

  • Germany's new leader will face the same challenge as its car industry

  • How to keep their biggest trading partner onside

  • ...without ending up in its pocket

  • China already leads Germany in one crucial aspect of manufacturing...

  • ...digitalisation

  • This is not traditionally a country...

  • ...that has been closely associated with digital innovation

  • It's going to be a big challenge...

  • ...across a whole range of domains

  • Look at carmakers, and it's, you know traditionally...

  • ...engineers have been at the heart of what it is that car manufacturers do...

  • ...making components, fitting them together, making them look beautiful

  • The digital skillset has traditionally taken a backseat...

  • ...and that's going to have to change

  • And it's not just Germany's car industry that needs to modernise

  • Before the pandemic, two-thirds of German businesses...

  • ...said they still regularly used a fax machine

  • And only one in three German companies...

  • ...have a central digital strategy

  • Just eight years ago, Angela Merkel became a meme...

  • ...when she referred to the internet asNeuland”...

  • ...the German for uncharted territory

  • The next government is probably going to have to be...

  • ...a lot more digitally literate...

  • ...than the ones that Angela Merkel has led for the last 16 years

  • And it's going to have to do a hell of a lot more...

  • ...to translate the rhetoric on digitalisation...

  • ...into the reality of fostering genuine change in this country...

  • ...which has been severely lacking for the last couple of decades

  • But there's an even greater challenge...

  • ...that could define Germany's global relevance: climate change

  • Here, Germany's car industry is a microcosm...

  • ...for how the country will need to radically shift

  • Traditional forms of power will need to be replaced

  • For cars, that means a race to go electric

  • Oliver Zipse took over as CEO of BMW in 2019

  • He's overseeing one of the biggest shifts in the company's history

  • A commitment to battery-powered cars

  • The whole car industry is launching a lot of electric vehicles now...

  • ...and BMW is on the forefront of that

  • I think we need to speed up our efforts...

  • ...to keep up with the electro-mobility demand

  • It's a big market developing

  • Of course, we want to increase our profitability...

  • ...and with the right set of components, products...

  • ...I think that can be a very solid business foundation

  • Climate change has forced this shift to a greener future

  • But it was American, not German engineering that first realised it

  • An electric car can be the best car in the world

  • Although an early investor in electric technology...

  • ...BMW has now fallen behind rivals in the e-car market

  • Other German carmakers were slower still

  • When it comes to fostering innovation...

  • ...the country is still in second gear

  • Although disruptive innovation does exist here...

  • ...Germany's leaders could do more to nurture it

  • Let's see the acceleration on it

  • It's good

  • Sono Motors is a startup based in Munich

  • They're technically carmakers...

  • ...but their approach is light years away from the traditional brands

  • What we're doing is we're producing an electric vehicle...

  • ...that is equipped with solar cells

  • They're one of several developers around the world...

  • ...trying to get a solar-powered vehicle to market

  • Their car, the Sion...

  • ...can share power with the grid and other cars...

  • ...and comes with ridesharing software built in

  • Their claim is that they're the only car company...

  • ...that thinks the industry should be selling fewer cars

  • Their approach could upend the industry...

  • ...and their ethos is emblematic of a new way of German thinking

  • We see ourselves as a mobility service provider...

  • ...it's not only about the car...

  • ...it's about the whole new mobility concept we're providing

  • Carsharing, ridesharing, power-sharing, a car itself...

  • ...solar integration, solar technology we sell to others

  • This whole new approach on how we think...

  • ...mobility should look like in the future

  • Small companies like Sono have the vision for a greener future

  • But Germany's politics may make it hard to realise

  • One of the challenges I think...

  • ...that you're going to see in Germany...

  • ...is that the next coalition...

  • ...is probably going to be made up of three different parties...

  • ...that may well have very different ideas about...

  • ...how to manage the climate transition

  • The sort of consensus-oriented approach...

  • ...that's deeply ingrained in Germany...

  • ...may not look like it is particularly well suited...

  • ...to manage this extraordinary industrial transition...

  • ...that we're going to have to bring about in the years ahead

  • So that's going to mean a very, very big role...

  • ...for the next chancellor

  • And as efforts to digitise continue...

  • ...Germany's new leader should plan for a workforce in need of upskilling

  • We're going to have a massive ramp up...

  • ...of jobs in the battery-manufacturing sector

  • We're going to have a huge demand for coders...

  • ...digital skills and a concomitant decline...

  • ...in the demand for engineering skills that we've seen

  • And as China's might grows, Germany will have to be more careful...

  • ...about who it gets into bed with...

  • One of the things I think, for example, that you're going to see...

  • ...in the next legislative period is...

  • ...real investment in Europe's ability...

  • ...to stand on its own two feet to ensure...

  • ...that it is not excessively exposed to the risks...

  • ...that could come from a stepping-up of the strategic competition...

  • ...between America and China

  • Angela Merkel was careful not to scare voters...

  • ...with talk of transformation

  • But that's left Germany's new leaders with a lot to do

  • Germany has to do better, right?

  • We have those very big companies, those very big players here

  • But they aren't the disrupter, the driver behind innovation

  • Disruption comes always from the new and young companies...

  • ...which drive change

  • German startups rarely grow into tech giants

  • Without making changes...

  • ...Germany risks losing competitiveness throughout its economy

  • There's a nice German word, Zukunftsfähigkeit...

  • ...which is roughly translated as the ability to face the future

  • A lot of people looking at these challenges...

  • ...are starting to wonder how Zukunftsfähig Germany really is...

  • ...and this really is going to be a big challenge...

  • ...not only for the next chancellor...

  • ...but for the government that he or she is going to lead...

  • ...because a lot of people think...

  • ...that Germany isn't really ready...

  • ...and that it will need to act quite quickly...

  • ...across a whole range of domains in order to meet these challenges head on

  • Thanks for watching

  • To read The Economist's assesment of Germany's future after Angela Merkel...

  • ...click the link

  • And don't forget to subscribe

  • There is a basic consensus in our society for sustainable mobility

For Germany it's the end of an era

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To see Germany’s future, look at its cars | The Economist

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    joey joey posted on 2021/09/25
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