In recent years, German automakers announced ambitious plans to transition to electric vehicles (EVs) and compete with Tesla’s dominance in the sector. However, they find themselves falling further behind instead of closing the gap, reports Bloomberg.
In the first half of this year, Tesla delivered almost 890,000 cars, more than the combined EV sales of Volkswagen AG, BMW AG, Mercedes-Benz Group AG, and Porsche AG.
The German auto manufacturers face challenges due to software issues delaying key models and decreasing sales in China, their largest market. Tesla and China’s BYD Co. are significantly outperforming them in the Chinese market. Even in Germany, Tesla remains the top EV brand.
Matthias Schmidt, a Hamburg-based auto analyst, said, “Tesla is still miles ahead of the German carmakers in all the major markets. They’re under pressure to boost volumes to reach the kind of economies of scale needed to make EVs profitable.”
While German automakers negotiate with unions about transitioning their production sites from combustion engines to EVs, Tesla is planning to expand its German factory and build a new one in Mexico.
The shift to EVs has also threatened the position of German car manufacturers in China. Despite dominating combustion-car sales for decades, they have recently been outperformed by local brands producing affordable EVs customized to local preferences.
Despite these setbacks, German auto companies remain optimistic. They continue to generate healthy profits from combustion-engine models, and plans to introduce EV-focused platforms around the middle of the decade could significantly alter the competitive landscape.
Volkswagen is preparing to introduce a compact EV priced at less than €25,000 and Mercedes plans to release an electric version of its compact CLA sedan in the US next year. Similarly, BMW is banking on its “Neue Klasse” underpinnings, set to arrive around 2025, to boost sales.
Bloomberg Intelligence analyst Michael Dean remarked, “The next-generation EV platforms from the Germans could change things. That’s when you’ll see a big push from them, also in China.”
