The auto industry doesn’t need any state aid – economy

The German auto industry has not only had an easier socio-political stand. It starts with the International Motor Show in Munich. The IAA used to be the glamorous high mass of a celebrated industry, today the question of what kind of protests the city should prepare for is being discussed. Constructive and in dialogue? Or escalation and violence? The manufacturers’ marketing strategists have been claiming for decades that cars should trigger emotions. But immediately so emotional?

It’s not about stationing medium-range nuclear missiles on Munich’s Odeonsplatz. It’s about the subject of mobility.

However, the squabble at the IAA shows once again that the industry’s image has been badly damaged since the VW diesel scandal at the latest. In addition to the poor image of the industry, there is now also the historical reorganization of the entire system, away from fossil fuels towards more sustainable mobility. The realignment of the companies is devouring billions, at the same time Chinese automakers such as BYD, Geely and Brilliance have long been ready to drive the VWs and Daimler into the parade all over the world.

This is one of the reasons why industry has always been able to rely on generous political support in recent years. With scrapping premiums against the financial crisis, with billions against the consequences of the corona pandemic and for the sale of more environmentally friendly cars, and finally with a multi-billion “future fund” for more electromobility and digitization in 2025. The structural change and the associated image campaigns will be complete of course, always subsidized by the state.

It is obvious that industry has to change completely and drastically reduce its emissions of climate-damaging carbon dioxide (CO₂) in cities and on highways. It’s about the future of the planet. The only question is: why does what is necessary have to be funded with billions in taxpayers’ money? According to calculations by the consulting firm EY, the 16 largest car companies in the world made operating profits totaling 71.5 billion euros between January and the end of June this year – a record figure. Just one year after the great Corona Depression, carmakers are more profitable than they were before the pandemic.

The German manufacturers earned particularly well

The Germans earned a particularly large amount of money – BMW, Daimler and Volkswagen alone made more than 30 billion euros in profits. Crisis? Are you kidding me? Are you serious when you say that. Record numbers, increased forecasts, brilliant prospects. This has to do with the fact that many have already swept through their plants with gigantic austerity programs. But also with the fact that more money can be made with larger sedans and SUVs. In any case, the companies are currently not requiring care. So why the very generous political support?

Also worth discussing is the case of the US electric car manufacturer Tesla, who is not only building its electric car factory in Europe in Grünheide near Berlin, but also wants to start manufacturing battery cells there on a large scale. An important signal for Europe, for Berlin as a location and for the labor market there – and a major strategic announcement: battery cells do not necessarily have to be imported from China or South Korea, they can also be manufactured here very well and in this way retain their independence.

However, the matter is not in vain: According to reports, the Californian carmaker is to be given state subsidies of around 1.1 billion euros from a European battery cell program. A billion euros would be a lot of money. It’s not surprising; Tesla boss Elon Musk is considered a shrewd negotiator and tactician – and as a representative of a world in which everything has its price. However: The multi-billionaire is one of the richest people in the world, his company recently had a market value of more than 730 billion dollars. Do Tesla and its boss really need 1.1 billion euros to build battery cells in Grünheide?

There are certainly industries that could very well use funding in these times. But the auto industry is not one of them at the moment.


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