DER SPIEGEL’S PERSPECTIVE
VW, BWM, Daimler Are In A Race to Try And Catch Tesla
Government subsidies promoting the purchase of electric cars in Germany are causing demand to skyrocket
VW, BMW and Daimler are all overwhelmed by the sudden boom https://www.spiegel.de/international/europe/vw-bwm-daimler-the-race-to-beat-tesla-at-its-own-game-a-58ddb443-29be-4764-9f5c-3d1140e0519f
VW, BWM, Daimler Are In A Race to Try And Catch Tesla
Government subsidies promoting the purchase of electric cars in Germany are causing demand to skyrocket
VW, BMW and Daimler are all overwhelmed by the sudden boom https://www.spiegel.de/international/europe/vw-bwm-daimler-the-race-to-beat-tesla-at-its-own-game-a-58ddb443-29be-4764-9f5c-3d1140e0519f
Not only are there too few vehicles coming off the assembly lines, but there aren't enough charging stations around Europe
The companies are now going on the offensive to catch up with Tesla
The companies are now going on the offensive to catch up with Tesla
Right before Markus Duesmann began his new and difficult mission he fulfilled one of his life's dreams
Duesmann, the designated head of the German automaker Audi, hopped on a motorcycle and spent several months cruising around Europe, from Gibraltar to the Black Sea, from the North Cape to the British Isles
In all, he put more than 28,000 kilometers on the odometer
In all, he put more than 28,000 kilometers on the odometer
That journey Duesmann would later tell his confidants helped him gain perspective
Indeed, there are many things he sees more clearly now :
His respect for Europe, its size and its cultural diversity had grown, he said
Indeed, there are many things he sees more clearly now :
His respect for Europe, its size and its cultural diversity had grown, he said
So had his respect for Audi's biggest competitor in the field of electric mobility - Tesla
In the fall of 2019, Duesmann was sitting on his bike when he received a message from Berlin
The e-car pioneer Tesla was planning on opening a car factory just outside the capital
In the fall of 2019, Duesmann was sitting on his bike when he received a message from Berlin
The e-car pioneer Tesla was planning on opening a car factory just outside the capital
Duesmann laughed out loud
He was impressed by the Californians' audacity
“At first, none of us took Tesla seriously," the Audi CEO would later say
“Then we were puzzled - and then we were shocked by what they were capable of”
He was impressed by the Californians' audacity
“At first, none of us took Tesla seriously," the Audi CEO would later say
“Then we were puzzled - and then we were shocked by what they were capable of”
Tesla's Model 3 is one of the best-selling electric cars in Europe, way ahead of its German competition
The only carmaker that has recently outperformed Tesla is Renault with its tiny e-car Zoe
The only carmaker that has recently outperformed Tesla is Renault with its tiny e-car Zoe
The Californians are also ahead of the pack with their charging stations
The company has installed almost 5,000 of its "Superchargers" in 24 European countries
The company has installed almost 5,000 of its "Superchargers" in 24 European countries
By comparison Ionity, the charging station consortium of BMW, Daimler, VW and Ford, has so far only managed to install 1,160 electric charging columns
The Germans Can't Keep Up
The Germans Can't Keep Up
The German government's subsidy to encourage the purchase of electric cars was recently increased to €9,000
This is putting more pressure on automakers with demand booming
This is putting more pressure on automakers with demand booming
In June alone, while the car market slumped overall, more than 8,000 e-cars were registered in Germany, a solid +40% more than in the previous year
Other European countries like Austria, France, Spain and Britain are also spurring demand with their own subsidy programs
Other European countries like Austria, France, Spain and Britain are also spurring demand with their own subsidy programs
Yet German manufacturers are ill-equipped for the surge in demand
Most new electric models won't hit the market for the next 6 to 18 months
And their ability to manufacture more of the existing models can't just be ramped up overnight
Most new electric models won't hit the market for the next 6 to 18 months
And their ability to manufacture more of the existing models can't just be ramped up overnight
“The car companies are suffering from bottlenecks," says Roman Zitzelsberger, head of the IG Metall union in the German state of Baden-Württemberg and a member of Daimler's supervisory board
“Especially with regard to battery cells”
“Especially with regard to battery cells”
Anyone who orders an electric car now will have to wait up to a year to get it
For some models German companies have even placed a freeze on new orders
For some models German companies have even placed a freeze on new orders
In the middle of the coronavirus pandemic BMW, Daimler and Volkswagen must now increase production, deliver more e-cars and close the massive gaps in their charging networks
Otherwise, the billions of euros they poured into their e-car offensives will have been for naught
Otherwise, the billions of euros they poured into their e-car offensives will have been for naught
The Artemis Project
Duesmann has been at his post since April and has hardly had any time to get used to the job
He's been tasked with turning the ailing premium brand back into an innovation leader, while at the same time accelerating the turnaround of Audi's parent company VW
Duesmann has been at his post since April and has hardly had any time to get used to the job
He's been tasked with turning the ailing premium brand back into an innovation leader, while at the same time accelerating the turnaround of Audi's parent company VW
Duesmann is also the head of research and development at VW
Just two months after he started his new job, he spearheaded a project aimed at putting Audi and VW on equal footing with Tesla
The project is called Artemis after the Greek goddess of the hunt
Just two months after he started his new job, he spearheaded a project aimed at putting Audi and VW on equal footing with Tesla
The project is called Artemis after the Greek goddess of the hunt
Duesmann has put together a largely independent team of experts from across the VW Group
They will be working in a startup-like atmosphere developing new technologies and eliminating previous deficits particularly in software and networking
They will be working in a startup-like atmosphere developing new technologies and eliminating previous deficits particularly in software and networking
The goal is "to accelerate the development of additional car models," according to the Audi CEO
Duesmann has experience with such tasks
As a former executive at BMW he was jointly responsible for the famous "Project i” which the company ultimately spun off
Duesmann has experience with such tasks
As a former executive at BMW he was jointly responsible for the famous "Project i” which the company ultimately spun off
Thanks to the e-cars developed there BMW was able to become a frontrunner in the field for a while
However the i3 and i8 models caused such severe losses that the Munich-based automaker lost its nerve
BMW's next generation of electric cars won't come onto the market until 2021
However the i3 and i8 models caused such severe losses that the Munich-based automaker lost its nerve
BMW's next generation of electric cars won't come onto the market until 2021
Project i was integrated back into the BMW Group essentially phasing it out
It's now up to Audi to do it better
The Artemis project managers want to be in close contact with the group's developers from the very beginning
It's now up to Audi to do it better
The Artemis project managers want to be in close contact with the group's developers from the very beginning
Duesmann has been admonishing his colleagues that the company must be constantly developing new cars, "otherwise we won't manage to establish a new technology”
By 2024 e-vehicles with completely new designs are set to be created, serving as blueprints for the entire VW Group
By 2024 e-vehicles with completely new designs are set to be created, serving as blueprints for the entire VW Group
A Dearth of Charging Stations
At the company's headquarters in Wolfsburg there is a fear that any new models, however innovative, wouldn't be very popular since potential customers will not have enough places to charge them
At the company's headquarters in Wolfsburg there is a fear that any new models, however innovative, wouldn't be very popular since potential customers will not have enough places to charge them
“The infrastructure is a huge challenge," VW's works council chairman, Bernd Osterloh, recently told investors, "especially in Southern and Eastern Europe”
There is still a long way to go, he said, "to push ahead with e-mobility in these countries”
There is still a long way to go, he said, "to push ahead with e-mobility in these countries”
According to Osterloh, CO2 reductions demanded by the European Union cannot be achieved if electric cars are only widely adopted in Scandinavia or the Netherlands, which have extensive networks of charging stations
So preparations are already underway within the Artemis project to create a separate charging network for the whole of Europe
Artemis' role model is Electrify America, a VW subsidiary that has set up thousands of charging points in the U.S.
Artemis' role model is Electrify America, a VW subsidiary that has set up thousands of charging points in the U.S.
The expansion of the charging network with its price tag in the billions was part of the settlement with the U.S. authorities for Volkswagen's diesel scandal but it they think it can become a strategic advantage for VW in the world's third-largest car market
Managers at the company recently presented the project to their German colleagues and made a big impression
Also having its own network in Europe could prove to be a major selling point for the company
Also having its own network in Europe could prove to be a major selling point for the company
The Artemis team's plans foresee Audi customers initially getting exclusive access, after which Porsche drivers would also be allowed to charge their vehicles at the stations
It's still unclear whether other VW Group brands or even competitors will also be given access
It's still unclear whether other VW Group brands or even competitors will also be given access
The first step therefore would be a closed network similar to Tesla's
Premium customers could reserve a charging port in advance to avoid waiting times
Premium customers could reserve a charging port in advance to avoid waiting times
Other offerings are in the works too with services that could make waiting times while charging more pleasant for customers - and that would ideally get them to spend more money
One idea is to cooperate with retailers who could open pop-up stores near the stations
One idea is to cooperate with retailers who could open pop-up stores near the stations
The project is still in its infancy
Issues are still being discussed like whether the charging stations should be installed primarily along major traffic arteries or also in cities
The plans are expected to further coalesce this fall
Issues are still being discussed like whether the charging stations should be installed primarily along major traffic arteries or also in cities
The plans are expected to further coalesce this fall
Other manufacturers doubt that shortfalls in charging infrastructures can be closed if everyone goes it alone
Markus Schäfer, a member of Daimler's management board whose portfolio includes group research, has called for "a coordinated approach between car companies, power utilities and politicians”
Schäfer says the German government would be well advised to use its current presidency of the European Council "to make a functional charging infrastructure throughout Europe possible”
This would also include creating standards for a uniform payment system
This would also include creating standards for a uniform payment system
Automakers, the Daimler manager adds, should concentrate on improving battery technology so that e-cars don't have to recharge as often
In the medium term Mercedes is looking to increase the range of its electric vehicles to 700 kms and reduce charging times to around 15 minutes
In the medium term Mercedes is looking to increase the range of its electric vehicles to 700 kms and reduce charging times to around 15 minutes
If electric cars no longer need to block charging stations for 30 minutes to an hour, "then gas station operators will also discover this business for themselves and set up their own charging points”
However in order to increase the range of their e-vehicles the companies are dependent on help from the Far East
The heart of the electric car is its battery and the corresponding software
This is what companies like CATL, Panasonic or LG Chem - high-tech companies from China, Japan and Korea – are best at
This is what companies like CATL, Panasonic or LG Chem - high-tech companies from China, Japan and Korea – are best at
German suppliers like Bosch or Continental have decided against producing their own battery cells
They view the Asian companies as being simply too far ahead
But German car companies are no longer willing to acquiesce to such dominance
They view the Asian companies as being simply too far ahead
But German car companies are no longer willing to acquiesce to such dominance
Schäfer says Daimler is now building a "global network of battery factories, from Europe and Asia to the USA”
The Stuttgart-based company got out of industrial mass production of battery cells in 2015
The Stuttgart-based company got out of industrial mass production of battery cells in 2015
Instead in early July the group acquired a stake in the Chinese battery manufacturer Farasis
The plan is to build a cell factory in Bitterfeld in eastern Germany, with Farasis as the producer and Daimler as the major customer
Another partnership will soon follow
The plan is to build a cell factory in Bitterfeld in eastern Germany, with Farasis as the producer and Daimler as the major customer
Another partnership will soon follow
This is how the automaker hopes to lock down the long-term supply of battery cells and gain insights into the future market
Daimler will also get to send Schäfer as its representative on the Farasis supervisory board
Daimler will also get to send Schäfer as its representative on the Farasis supervisory board
This kind of cooperation shows how much technological change is shifting the balance of power in the automotive industry
“The lever has been flipped toward electrification," says Andreas Wolf, head of the Continental powertrain division, Vitesco Technologies
“The lever has been flipped toward electrification," says Andreas Wolf, head of the Continental powertrain division, Vitesco Technologies
“There will be no renaissance of the combustion engine”
This means new players have a good shot at cornering the market
This means new players have a good shot at cornering the market
Experts from the management consultancy McKinsey wanted to know whether Asian car manufacturers could keep up with their Western competitors
To find out, they dismantled the 10 best-selling Chinese e-vehicles
They published the results of their study in June
To find out, they dismantled the 10 best-selling Chinese e-vehicles
They published the results of their study in June
They found that on average electric vehicles from Asia offer "a price-to-range ratio that is twice as good as that of their international competitors”
Many e-car makers who are still making losses today would turn a profit "as soon as they fully exploit their production volume”
Many e-car makers who are still making losses today would turn a profit "as soon as they fully exploit their production volume”
International manufacturers must hurry, the McKinsey authors added, "in order to participate in the market growth”
Whereas in the past it was mostly Chinese manufacturers who were keen to skim know-how from Western companies, these days it's often the other way around
Whereas in the past it was mostly Chinese manufacturers who were keen to skim know-how from Western companies, these days it's often the other way around
Chinese corporations possess competencies that are valuable for their German partners
In turn, they are seeking access to the European market
This is provided to them by well-known Western brands
In turn, they are seeking access to the European market
This is provided to them by well-known Western brands
That's why Daimler cooperates not only with Farasis but also has a major Chinese shareholder
Since 2018 the businessman Li Shufu has held a 10% stake in Daimler
He wants to turn Geely, the Chinese car maker he owns, into a global automobile conglomerate
Since 2018 the businessman Li Shufu has held a 10% stake in Daimler
He wants to turn Geely, the Chinese car maker he owns, into a global automobile conglomerate
A central role in its e-car offensive is played by Sweden's Volvo, a subsidiary of Geely
As early as 2017 Volvo announced that it would be equipping its entire fleet with electric motors
With Geely's help Volvo is trying to come up with a Scandinavian answer to Tesla
As early as 2017 Volvo announced that it would be equipping its entire fleet with electric motors
With Geely's help Volvo is trying to come up with a Scandinavian answer to Tesla
The executive in charge, Thomas Ingenlath, was formerly a designer at VW
He remembers well the time when German auto executives laughed at all-electric manufacturers like Tesla
He remembers well the time when German auto executives laughed at all-electric manufacturers like Tesla
But then the California-based company developed two vehicles that revolutionized the market - the Model S and the Model 3
“It's unusual for the top dogs to be down 2-0," Ingenlath says
But maybe that's what was needed for the Germans to start seriously rethinking things
“It's unusual for the top dogs to be down 2-0," Ingenlath says
But maybe that's what was needed for the Germans to start seriously rethinking things
As far as e-mobility is concerned, Ingenlath hasn't written off the Germans yet
But he does want to make life difficult for them
The first model, Polestar 1, is more of a collector's item with only 500 cars manufactured a year
But he does want to make life difficult for them
The first model, Polestar 1, is more of a collector's item with only 500 cars manufactured a year
Meanwhile Ingenlath plans to sell several tens of thousands of the Polestar 2, which was launched in Europe in July
Polestar hopes to go from being an elite niche brand to a premium e-car manufacturer
Production will take place in China
Polestar hopes to go from being an elite niche brand to a premium e-car manufacturer
Production will take place in China
The world's No. 1 market for e-mobility, China offers the best starting conditions
The government there recently extended subsidies it grants for the purchase of electric vehicles
They apply to e-vehicles offering long ranges at low prices
The government there recently extended subsidies it grants for the purchase of electric vehicles
They apply to e-vehicles offering long ranges at low prices
And customers' fears of not being able to charge their vehicles aren't really an issue in China, which has an extensive network of charging stations
Even the entry into established car markets like Germany or France seems to be easier than ever
Newcomers no longer have to build up their own dealership networks to succeed - Tesla proved as much
Newcomers no longer have to build up their own dealership networks to succeed - Tesla proved as much
Polestar is selling its new model mostly online
It plans to open showrooms in seven major German cities and will otherwise rely on Volvo dealerships
It plans to open showrooms in seven major German cities and will otherwise rely on Volvo dealerships
There's another way in which Polestar is fundamentally different than the Germans' e-cars
Whereas VW, Daimler and BMW are each developing their own IT operating systems, Polestar is partnering with Google
The Polestar 2 relies on Google Maps and Google Assistant for navigation
Whereas VW, Daimler and BMW are each developing their own IT operating systems, Polestar is partnering with Google
The Polestar 2 relies on Google Maps and Google Assistant for navigation
Ingenlath sees no point in wasting time and money on developing an inferior product than what Google has to offer
The German automakers are struggling to network their cars
The best example is VW
The German automakers are struggling to network their cars
The best example is VW
Its new e-car, the ID.3, was supposed to be a computer on wheels, but at the time of its launch in September the smartphone connection App-Connect won't be working yet
In order to fix the problem the car will have to be brought to a repair garage
In order to fix the problem the car will have to be brought to a repair garage
Unlike Teslas, whose software can be updated remotely
To prevent this from happening again in the future, Duesmann, VW's chief developer, is working on completely new software
He has around 5,000 employees at his disposal to help him
The whole thing will take years to finish
To prevent this from happening again in the future, Duesmann, VW's chief developer, is working on completely new software
He has around 5,000 employees at his disposal to help him
The whole thing will take years to finish
But already the endeavor is wearing down top personnel
The VW Group's head of software, Christian Senger, had to step down just two weeks after the project officially began
Now Duesmann wants to pick up the pace
He has plenty of respect for the job and for Tesla
The VW Group's head of software, Christian Senger, had to step down just two weeks after the project officially began
Now Duesmann wants to pick up the pace
He has plenty of respect for the job and for Tesla
“As far as networking and on-board networking go," he said recently, "we are not yet on equal footing”