Germans Automakers May Never Be The Same Again

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Arriving too late to the EV and tech game has consequences.

For the past 70 years or so, German automakers have been renowned for their engineering and technological excellence. Audi, BMW, Mercedes-Benz, Porsche, and Volkswagen have led the way in performance, luxury, and quality. That is until a certain California start-up began building all-electric cars and defied the odds. Tesla was founded by a young Elon Musk, and, together with Google and other technology companies, reinvented how customer's vehicle data is obtained and used. Ride-sharing companies like Uber built on that and now EVs, data, and advanced technologies, such as autonomous driving, are coming together.

The American can-do attitude and entrepreneurial spirit fought back and won. In China, eager start-ups are popping up left and right, all hoping for a piece of the action. Meanwhile, those German automakers are racing to catch up. They were simply late to the game. A new editorial from the staff of Der Spiegel is making this very argument by pointing out where they went wrong in recent history.

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"The industry, led by Volkswagen, believed it could solve its problem in two ways: first by creating better, less-polluting and more efficient (diesel) cars and secondly, when the first approach failed, by cheating or denying reality," the article states.

VW's Dieselgate scandal, ironically enough, turned out to be the catalyst needed to modernize the German auto industry. Unfortunately, the radical changes required for the 21st century were not fully realized by the management and supervisory boards of these companies until fairly late in the game. Tesla and others were already way ahead. For the first time ever, the Germans are no longer the industry's driving force.

"Until recently, the prevailing mentality among German manufacturers was that the primary use for new computer technology and digital networks was perfecting conventional cars that already exist," the editorial continues. "They didn't question their traditional business model focused on selling cars for private transportation. Meanwhile, their upstart competitors from China and the US took a different approach by placing digital elements at the center of their new mobility concepts. For those companies, computers are no longer just an ingredient - they're the very heart of the vehicles and their business model."

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Tesla views its vehicles differently. For them, a car is a "high-performance computer than can do any number of amazing things, including drive itself." In China, its tech companies could care less about driving pleasure but are rather interested in developing new mobility tools than be integrated into vehicles. Volkswagen, to its credit, is quickly adapting to this new reality with the launch of the all-electric ID.3. An entire lineup of ID-branded EVs will soon follow.

Also new is the Audi e-tron, Porsche Taycan, and Mercedes-Benz EQC, but is this all too little too late? The honest answer is that nobody knows for sure. What's for certain, however, is that German carmakers are not about to lose their status without a fight. Their own transformation is already underway.

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