Germany bets on BEVs on road to climate neutrality, but questions remain

17 January 2023

The German government is eager to strengthen the country’s automotive industry while meeting vital environmental targets. Home to some of the world’s largest carmakers, Germany is known as an ‘auto nation’, but the past year has highlighted several challenges the industry is facing on its way to achieving climate neutrality.

Supply-chain disruptions, production stoppages, high energy costs, and the pace of electrification were just some of the issues carmakers grappled with in the past year. To address them, the German government hosted a mobility summit last week, inviting key suppliers and major vehicle manufacturers.

Representatives from BMW, Mercedes-Benz, Volkswagen (VW), and Tesla mingled with their counterparts from the battery and semiconductor industries. High-profile politicians, including German Chancellor Olaf Scholz and the country’s economy, finance, transport, and environment ministers, were also present.

While little information trickled out of the meeting, participants focused on one central question: how can the mobility sector achieve climate neutrality while maintaining employment and competitiveness?

Electromobility is seen as key, but BMW issued words of caution. The carmaker told Autovista24 that focusing on electric mobility alone would not be enough. It views ‘technology openness’ as crucial, including the use of fuel cells. At the same time, the carmaker pointed to the electric vehicle (EV) supply chain.

‘It is unclear how Europe intends to ensure strategic access to the crucial raw materials for electromobility. If the EU wants to be a pioneer of sustainable mobility, the availability of these materials must be secured, otherwise we will be threatened by new dependencies,’ a BMW spokesperson said.

Nonetheless, the German government last week reiterated plans to have at least 15 million battery-electric vehicles (BEVs) on the roads by 2030. This goal is ambitious, and some analysts consider it unrealistic. DIW Berlin, a German institute for economic research, found that one million BEVs have now been registered in the country.

December 2022 proved to be a bumper month for BEVs in particular, seeing just over 100,000 new-car registrations. But in order to hit the 15-million mark by 2030, the DIW found that 145,000 vehicles would have to be registered each month until the end of this decade.

BEV sales are up

German carmakers are doing their bit by launching new BEV models and driving up sales and deliveries, despite supply bottlenecks. The VW brand saw global BEV deliveries grow by almost 24% in 2022, with the ID.4 its top electric car.

However, the manufacturer warned that 2023 would be another volatile and challenging year, mainly because of ongoing semiconductor shortages. It expects the supply situation to improve gradually, with production stabilising. The carmaker has struggled with long delivery times and is still trying to catch up with a large order backlog. In Europe, orders across all drive types were up 18% in 2022.

Audi also saw large order numbers in 2022, increasing BEV deliveries by 44%. In total, Audi delivered around 118,000 all-electric models in the year. The manufacturer said sales in Germany helped drive overall growth in Europe, with the significant increase in BEV deliveries responsible for the sales increase.

In its home market, Audi is competing with premium brands BMW and Mercedes-Benz, both of which benefitted from a growing interest in BEVs last year. Although BMW’s total group sales were down nearly 5% last year, with the company selling 2.4 million vehicles, EV sales were up nearly 108% to around 216,000 units.

Again, order intake for BEVs was high and BMW said its focus would remain on ramping up electromobility, aiming for 15% of its total 2023 sales to come from EVs. The premium brand is planning to launch a new BEV, the BMW i5, later this year to maintain momentum.

Mercedes-Benz also reported a strong increase in BEV deliveries in 2022, with this figure up 124% to a total of 117,800 units. The company wants to go all-electric by 2030, at least where market conditions allow. It recently announced plans for its own high-power charging network that will include more than 10,000 chargers.

‘Our ambition is to make our entire fleet of new vehicles across all stages of the value chain CO₂-neutral by 2039. Mercedes-Benz already offers a battery-electric model in all segments in which the brand is represented. In 2022, the portfolio included eight fully electric Mercedes-EQ models,’ a Mercedes-Benz spokesperson told Autovista24.

Reality check

While Germany’s BEV figures look promising, the country’s automotive industry association (VDA) said Germany and Europe had to stay ‘internationally relevant’, calling for action on several fronts. Expanding EV infrastructure is a key agenda point for the organisation, with the VDA urging continuous investment.

It called on the government to secure long-term and sufficient CO₂-neutral energy supplies. The energy crisis in the country is an ongoing headache for consumers and manufacturers alike. Industry experts also expect higher electricity prices to have a negative impact on EV sales this year.

The VDA cautioned that energy ‘must not become a luxury good for the [automotive] industry and consumers.’ It said reductions in taxes and levies could further relieve electricity prices in an unbureaucratic way.

Access to raw materials is also of utmost importance, with the VDA emphasising that shortages need to be prevented. ‘Brussels must guarantee legal security for investments with as many global raw material partnerships as possible. In addition, the raw material deposits in Europe itself must be developed and used,’ it said.

The organisation expects there to be a gradual easing of the strained supply situation in 2023, with domestic passenger-car production due to recover further. However, the VDA projects the German new-car market will see a marginal growth of 2% this year, with registrations forecast to total 2.7 million units – below Autovista24’s expectations.

While the mobility summit drew attention to some of these issues, it also drew criticism for being too car-centric. Critics point out that more needs to be done to ensure the transition to climate neutrality in the German mobility sector.

Berlin-based think tank Agora Verkehrswende said the automotive industry requires planning and investment security for the transition to electric mobility. It urged politicians to create the necessary framework conditions.

The think tank suggested that the next meeting should include representatives of all modes of transport. ‘Climate protection and securing the mobility of tomorrow can only succeed as a joint effort,’ said Agora director Christian Hochfeld.