Electricity prices in the European Union are two to three times higher than in the United States, and that is why the departure of the auto industry from Europe to the USA is being considered.
“We’re not going to move existing production to the US. But it’s more likely that we will the next factories to be built in America. There is a risk that Europe will lose out from this redistribution.” This statement by Klaus Rosenfeld, head of “Schaeffler”, the fourth largest German auto parts manufacturer with more than 80,000 employees worldwide, reflects an important trend: the automotive industry is increasingly moving its production from Germany and elsewhere in Europe to China and North America, writes Deutsche Welle.
“There are many reasons why the automotive industry is leaving Germany and Europe,” Stefan Schneberger, manager of Berullis Strategy Advisors, a consulting firm specializing in the automotive industry, told DW. “But the stricter regulatory requirements to which the industry is exposed in the EU and Germany also speak in favor of relocation. And of course, the subsidies currently offered in the US are also tempting.” However, these billions in subsidies are linked to climate technologies such as electromobility.
American subsidies
Due to plans to relocate production, the number of cars that should be produced in Europe in the period from 2023 to 2029 will also decrease, according to the current Berulis analysis. But this trend, on the other hand, causes much more positive forecasts for other regions of the world. It is even expected growth in global vehicle production, albeit weaker than forecast in 2021.
“Current forecasts show the negative effects of the external shock caused by the war in Ukraine, as well as corrections to overly optimistic 2021 forecasts given the end of restrictions related to the pandemic and the chip crisis,” Schneberger explains.
According to the analysis, between Germany and the USA in the coming years expects a difference in production of about four million vehicles. Relocations, such as those recently announced by Audi and Ford, would reinforce this trend. As a result, it is predicted loss of up to 100,000 directly affected jobs and a drop in gross domestic product (GDP) in Germany of 0.6 percent in 2029.
In this context, project manager Šneberger points out that the importance of the automotive industry in Germany is greater than in neighboring European countries. “Here, its share is almost five percent of GDP, which means that it will the decline will especially affect the German economy. In addition, the competitive advantage of German car and auto parts manufacturers, which was mainly associated with internal combustion engines, is waning.”
America also needs electric cars
It’s almost a thing of the past. Because in addition to digitization, the expansion of alternative drives is one of the megatrends in the automotive industry. In the US, the end of the internal combustion engine is also in sight, but still more slowly than in Europe or China. For comparison: currently, a good 14 percent of new registered vehicles in Germany are purely electricin China, the largest market for electric cars, 21 percent, and in the USA less than six percent.
This could change significantly in the near future. “The times when electric vehicles were a phenomenon limited to the West Coast of the USA are in the past,” Hening Ludes told DW. an American expert on the car market and a partner in Berils Strategi Advisors.
According to Ludes, who collaborated on the corresponding analysis, The US is already in direct competition with Europe for second place as the world‘s most important market for electric cars, just behind China. Sales of such vehicles are expected to exceed six million units per year in the USA in 2030, which corresponds to a market share of about 40 percent.
“Recent announcements by the US Department of Energy on stricter fuel economy standards and the announcement by the US Environmental Protection Agency (EPA) on limiting CO2 emissions could increase the market share of electric cars in the US to as much as 60 percent by 2030,” says Ludes.
The best-selling pickup trucks on the American market
The biggest challenge for German companies will be the specific needs of American customers who are not very familiar with electromobility. This includes specific vehicle models. “Unlike Europe, SUVs and pickups will make up more than 75 percent of the pure electric car market,” says Ludes. “Ford’s F-150 pickup truck remains the best-selling vehicle on the American market,” writes Deutsche Welle.
(WORLD)