Time for the division of labor: Tesla enters German auto industry

Even if some don't like it – the fact is: Elon Musk is becoming an integral part of the German auto industry thanks to his gigafactory in Grünheide. His reception at the industry regulars' table should be frosty. Because the market for e-vehicles is small – too small for everyone.

In common parlance, boarding means "to enter an enemy ship and take possession of it by force" and in seafaring language "to climb into the rigging of a ship".

Developments are currently taking place in the German automotive industry to which both apply. In addition, three press releases from the beginning of September, which only appear to be detached from each other and appear as marginal notes:

• First: According to the Federal Motor Vehicle Office (KBA), new car registrations with alternative drive types showed a three-digit increase compared to the same month last year in August 2020: the number of battery-only electric vehicles (BEV) increased by 222 percent to 16,076 units (share of Total market 6.4 percent, of which 1.1 percentage points from Tesla). The approvals of hybrids (this includes both PHEV and mild hybrids, in which an electric motor is supplied with energy by the motor, stores it and uses it again if necessary) increased by "only" 133 percent, with 46,188 vehicles (a good 18 percent) represented three times as often as pure battery cars. The biggest increase of this hybrid was recorded by the so-called plug-in hybrids (PHEV) – i.e. cars with dual drive systems (combustion engine plus battery-powered electric motor), which KBA statistics also include in the category of electric vehicles. With 17,095 units and an increase of almost 448 percent, they eclipsed all other drive types. Important: the PHEV market share of 6.8 percent was again significantly higher than that of purely electric vehicles. The gap would be even greater if Tesla hadn't triumphed with an August growth rate of 454 percent; In terms of the number of units, however, Tesla remained significantly behind the plug-in hybrid approvals with 2864 units.
• Second: Volkswagen is quietly announcing a spectacular change of strategy: The sole focus on e-mobility announced by CEO Herbert Diess suddenly seems to be a thing of the past. The sports car subsidiary Porsche intends to significantly advance the development of synthetic fuels – so-called e-fuels – in the future. According to Michael Steiner, Head of Development at Porsche, you can not make fast enough progress in terms of environmental protection with electric mobility alone. Above all, the world's old stock of 1.6 billion combustion cars is a stifling CO2 burden. According to Steiner, e-fuel technology is so important primarily because the internal combustion engine will dominate the automotive world for many years to come.
• Third: Tesla boss and innovation genius Elon Musk visited Germany at the beginning of September 2020 without the usual PR noise. He not only examined the construction progress of his factory "in Berlin" ("Germany rocks"), but also had many conversations with VIPs from politics and business. Among other things, he is said to have stopped by for a flying visit to Wolfsburg at VW boss Diess and the powerful works council Bernd Osterloh. Musk was allowed to test the first fully electric car ID.3 from VW, which is said to be superior to the Tesla Model 3 in all respects. It is not known whether Musk was impressed. There is a video that VW published. But neither Tesla nor VW took a position on the content of the conversation.

If you put these three "puzzle" messages together, then – with professional imagination – the vision of a reorganization of the German automotive industry can certainly emerge.

Because Musk with his gigafactory in Grünheide will – whether you like it or not – become an integral part of the German auto industry. With his electric car project he will fix himself "in the rigging" of the big car in Germany. Not least because after commissioning he will be accepted as a full member of the Association of the German Automotive Industry. Opel and Ford as subsidiaries of foreign corporations serve as models. There is no question that there is a need for discussion with powerful representatives from politics and the industry. Nevertheless, the hunter and the hunted will suddenly sit together as colleagues at the VDA table. Welcome to the club, Tesla!

In addition, there are completely new cooperation opportunities for everyone, which nobody will be able to avoid. Because the fact is that the market for electric cars, especially in the price range that Tesla builds and into which all German luxury manufacturers want to advance, is and remains limited. Even those responsible in the industry do not expect a market share of more than 10 to 20 percent for electric cars.

If you add up the planned capacities for e-cars in Germany and France, the result is around 4 million annually. In purely mathematical terms, the European market, with its 16 million new vehicles per year, may absorb this. However, if – as is to be feared in view of the regional charging infrastructure – this offer should concentrate almost entirely on the German market, it will not work for a single manufacturer.

There is simply no room for all of them, not even for Tesla in the upper class. There is a risk of huge bad investments. That may not be a problem for Tesla, but it is for the German manufacturers.

What is the old strategy rule called: "If you can't beat someone, join them." Since Tesla cannot be beaten by German manufacturers in its technology field for the time being, it makes sense to integrate and cooperate with the newcomer as a future part of the German auto industry. Economically and economically sensible – because associated with the least amount of waste of resources – would then be a new division of labor in the industry according to the motto: Everyone simply does what he can do best.

As a result, it would look like this: Some build pure electric cars (BEV) and provide others with the necessary hardware and software for the drive and battery for their program. The others continue to build their combustion engines and plug-in hybrids (PHEV) ("fed" with e-fuel) and deliver their outstanding combustion know-how in all classes to those who lack it.

And all German manufacturers are pressing ahead with the improvement of the existing combustion technology based on e-fuel, knowing full well that automobiles with combustion technology will be indispensable for decades in the taiga and tundra, in the savannah and the jungle – but with a fossil-neutral, environmentally friendly e-fuel firing. Also and especially for the old stock.