They got an early start in Paderborn. Five years ago, when the range of electric cars available in Germany was still quite limited, Caritas banished many of the diesel- and gasoline-fueled cars from its fleet and purchased 114 electric cars and 45 e-bikes. In one fell swoop, the Catholic Church's charity organization became a pioneer in the fuel-loving republic.

At the time, the CEOs of Germany's major car companies were still busy complaining about a lack of charging stations. In no time at all, Caritas Paderborn had 118 of its own charging stations installed. "Sustainable on the road" is emblazoned in red letters on the white, polished Caritas cars that around 500 of the organization's caregivers use to drive to the people they assist.

It all looked like a success story: According to Caritas, operating costs fell by 40 percent because electricity was cheaper than gasoline and the electric cars had to be serviced less often. CO2 emissions from the vehicle fleet fell by around 190 tons per year.

But the situation has since changed. Officials at Caritas ran into a problem they weren't expecting: There aren't many electric cars around that the charity can afford, and leasing rates have risen sharply.

Early on, Caritas sometimes paid less than 60 euros per month per vehicle. But today, new contracts cost 200 euros, often even 300 euros. E-cars are becoming less and less of a cost-saver for the organization.

"We're hardly able to find what we are looking for from German manufacturers," says Hans-Werner Hüwel, head of nursing and healthcare for the charity. Caritas is now increasingly switching from VW or Smart to electric models from Renault or its budget brand Dacia. But even these are often more expensive to lease than comparable combustion engines.

Still, he says the charity organization will remain loyal to electric cars for "as long as we can afford it." But he also reports that Caritas chapters in other areas have begun switching their fleets back to combustion engines.

Frustration among electric car buyers is helping to fuel a combustion boom. And it's not just at Caritas that the shift to electric cars has stalled. The German federal government's central modernization project is in danger of failing. Not only is the German populace not playing along, but manufacturers haven't come up with attractive products and the political framework conditions still haven't been optimized. Electric car purchases remain the domain of those with healthier salaries.

No German manufacturer currently has an electric car on the market that costs less than 25,000 euros, and most prices are well over 30,000 euros. The e-up!, a compact bestseller for years, was taken off the market by Volkswagen in 2023 – allegedly because it was no longer profitable. VW has no plans to bring cheaper electric vehicles back onto the market until 2026. Meanwhile, Mercedes and its Chinese partner Geely keep adding extras to the E-Smart, making it more expensive.

In most cases, it costs several thousand euros more to buy an electric car than a comparable combustion engine.

Added to this is an economic environment that makes the change seem unattractive: recession, inflation and highly volatile electricity prices, which were among the highest in Europe in 2023. The German Association of the Automotive Industry (VDA) expects sales to fall by 14 percent this year.

They may frequently tout clean mobility, but politicians have actually contributed to the current mess with policies that have been all over the map. The federal government canceled its subsidies for electric car purchases of up to 4,500 euros in mid-December - a sudden decision that unsettled consumers and left car manufacturers stunned.

At the same time, a 200-million-euro subsidy program that had only been announced in June and was intended to promote the private charging points known as wallboxes, in addition to the related solar systems and electricity storage units, was also cancelled. In one fell swoop, consumers who wanted to buy the expensive technology were left to fend for themselves.

In addition to the losing their possible financial attraction, the back and forth within the current German government has also taken a toll on the popularity of electric cars. German Transport Minister Volker Wissing of the business-friendly Free Democratic Party (FDP) is still flirting with synthetic fuels as an alternative to electric cars, as if the pace of the global car industry is set in Berlin and not in China and the United States, where Germany's naval gazing is of no interest to anyone.

What the German government is doing better than anything else is to confuse German car buyers more and more when it comes to deciding on an electric car. The consequence is that the German government's target of having 15 million electric cars on German roads by 2030 has faded into impossibility. So far, the figures are only a tenth of that.

This political disaster, though, has had economic consequences.

With manufacturers like VW struggling to get rid of their stocks of electric cars and new manufacturers entering the market at the same time, an unprecedented rebate battle raged at the beginning of the year. In the first quarter, retailers were offering discounts of 15 percent, 20 percent and sometimes even more. Those who already owned electric cars had to watch as the value of their vehicles melted away. Leasing has become less attractive because interest rates are high and electric vehicles are losing value faster than expected. Car rental companies such as Sixt are removing electric vehicles from their range in droves. The financial risk appears to be too high.

In Germany, the electric car is becoming a symbol of a shift to green technologies that has been botched by the state, just like the debate over the switch from gas heating to heat pumps that preceded it. The Alternative for Germany (AfD) party is waging a cultural war from the right against the electric car. Left-wing extremists, meanwhile, set fire on March 5 to an transmission tower just outside of Berlin, shutting down the Tesla plant there for several day. In a statement of responsibility, activists claimed the act was in protest against "techno-fascists" like Elon Musk.

At the same time, it is clear to almost every transport policymaker and auto industry executive in the world that the day of the electric car is coming – and fast. The question is whether Germany and its car manufacturers will be part of the transition and help shape it – or whether they will be bowled over by the change. No longer, it would seem, does Germany call the shots in the global automotive industry.

The pace and the technology are now determined by others. In China, the world's largest car market, almost a quarter of all new cars sold are all-electric vehicles. To survive in the country, you need competitive electric vehicles. The competition is no longer dominated by VW, BMW or Mercedes, but by Tesla from the United States and BYD from China. And the newcomers are no longer confining themselves to their home markets – they are also capturing market share in Germany and Europe.

Clinging to the old ways would be economic suicide. But the temptation is great to delay the death of the lucrative combustion engine for as long as possible. Mercedes-Benz boss Ola Källenius, who until recently wanted to go all-electric, is suddenly questioning the European Union's decision to phase out combustion engines by 2035. He says he doesn't know when the last gasoline or diesel car will be sold.

In Brussels, the shift to electric vehicles is apparently no longer a priority. European Commission President Ursula von der Leyen, once a staunch supporter of phasing out combustion engines, now considers it "very important" to review the issue in 2026. Manfred Weber, leader and group chairman of the European People's Party (EPP), the parliamentary group representing center-right Christian Democrat parties in the European Parliament, would like to "reverse" the ban on combustion engines. Germany's Christian Democratic Union party and its Bavarian sister party, the Christian Social Union, also want to make that demand part of their platforms for this spring's elections to the European Parliament.

The AfD, meanwhile, is calling for the "abolition of all climate protection laws" after June 9 European elections. The party has been campaigning against what it calls the "erroneous path to electro-mobility" for years.

But a different mood is prevailing outside of Germany. The sister parties of the CDU and CSU from several European countries, including Sweden, are sticking to the ban on combustion engines. At the convention of the center-left European People's Party family in Bucharest at the beginning of March, delegates prevented the a reversal of the phase-out from being anchored in the group's election platforms.

Italy's right-wing populist Prime Minister Giorgia Meloni even wants to lure both BYD and Tesla to Italy, the home of Fiat and Ferrari. The fact that Tesla boss Elon Musk is currently experiencing problems in the German state of Brandenburg due to a planned plant expansion in Grünheide suits her just fine. The greater the hostility towards electric cars in Germany, the greater the chance that the global e-market leader from the U.S. will prefer to invest in Italy in the future.

Workers in Germany would lose out.

The automotive industry in Germany accounts for 780,000 jobs and an annual investment of over 45 billion euros in research and development. As such Daniela Cavallo, the chair of the VW Works Council, which represents the interests of the company's workers, warns against delaying the transition to electric vehicles. She argues that moving away from the fossil fuel phase-out "would be fatal and a threat to the entire economy." Achim Dietrich, chair of the works council at car parts supplier ZF Friedrichshafen, says that e-mobility will prevail in the end anyway. "And if we don't manage to build the best electric cars, the Chinese will."

The electric shock has struck Germany with full force. Over the next few years, Volkswagen will have to save 10 billion euros. Car components supplier Bosch has announced plans to cut 3,500 jobs, Continental 7,000, and at ZF Friedrichshafen, there is talk of at least 12,000 job cuts. BMW is still in the best position: The manufacturer has so far not operated any purely electric car factories and has the ability to ramp up combustion engine production in its plants at any time, which is now paying off.

So, why are German car buyers holding back? The majority would be open to making the switch, according to a survey of more than 1,000 users of Carwow, an online marketplace for new cars. According to the survey, 55 percent can imagine buying an electric car as their next vehicle, significantly more than in October (39 percent). However, prospective buyers aren't satisfied with the current range of electric cars on offer. The majority complain about low ranges and high prices. "Customers are faced with a dilemma," says Carwow founder Philipp Sayler von Amende. "Many would like to switch to electric, but they prefer to wait until the technologies mature and the cars get cheaper." Still, switching to an electric car can even now be worthwhile.

One development is particularly alarming for Germany's car manufacturers: Those who are still interested in electric cars despite the problems are increasingly showing a willingness to switch from German cars to foreign brands. Half of those surveyed said they are already considering a Chinese brand, almost twice as many as in October.

The Chinese Offensive: "A Bloodbath"

It's mid-February, and the smell of fireworks fills the air outside the shipyard in Longkou in eastern China. A few days ago, it was Chinese New Year, and revelers set off masses of firecrackers here. Normally, the noise is followed by the silence of the "Golden Week," when the whole of China rests – everyone is off work, migrant workers go home to their villages and very little happens. But that wasn't the case at the CIMC Raffles shipyard this year.

The sound of welding and rattling metal emanates from the site. Cranes are in motion, workers are on the move. The full order books are clearly requiring that work continue even during the New Year week. The half-finished hull of a ship stands in a dock, with "Stockholm" and "Wallenius Marine" painted on it. The Swedish shipping company has ordered six car carriers from CIMC Raffles.

The shipyard already delivered a similar vessel to another customer in January, when the car manufacturer BYD accepted the BYD Explorer No. 1, capacity: 7,000 cars. The Chinese company plans to deploy up to eight of these ships and has budgeted investments of around 640 million euros for their construction. The huge ships are intended to help BYD conquer the lucrative markets of the West.

BYD is the largest car manufacturer in China and the world's second-largest electric vehicle manufacturer. The company surpassed VW, which had been the market leader in China for decades, in 2023. During the fourth quarter, the company overtook Tesla as the world's largest producer of electric cars for the first time. Both rivals, BYD and Tesla, began developing electric cars in 2003. But BYD has a competitive advantage: The company started out as a battery manufacturer in 1995 and is still able to build batteries for electric cars better and more cheaply than its Western competitors.

In contrast to the German manufacturers, the Chinese control the entire production chain, from the raw material mine to the battery cell to the car dealership. In January, the BYD Explorer No. 1 set sail from Longkou for the first time. The freighter sailed through the South China Sea and the Indian Ocean, around the Cape of Good Hope, across the Atlantic and, following a stop at the port of Antwerp, it finally arrived in Bremerhaven, Germany. Around 3,000 electric cars were unloaded there and distributed across Germany – including by truck to Stuttgart, the home of Mercedes-Benz and Porsche.

On the busy Theodor-Heuss-Strasse, in the Calwer Passage with its boutiques and cafés, BYD has set up shop in a trendy store. Bathed in soft light, the horror of the German car industry is on display there: a BYD Seal in "Atlantis Grey," with more than 500 horsepower and a sunroof. Spelling errors in the display menu can be quickly corrected "over the air" via a software update.

BYD is seeking to assert itself here, "in the largest and most competitive car market in Europe," as Jan Grindemann says. "Because if you want to get big in Europe, you can't skip Germany." Grindemann spent nine years working for Mercedes. Now, he's the chief operating officer of the Swedish vehicle importer Hedin, which sells BYD's cars exclusively in Germany and Sweden.

With BYD, Hedin wants to achieve what hardly any foreign brand has managed to do so far: crack the German car market. The 4,139 electric cars the company sold a year until recently would hardly be worth a mention. But the Carwow survey shows that the brand is rapidly becoming better known: Some 75 percent of respondents said they had heard of BYD. In two years, the Chinese are hoping to sell a six-digit number of electric cars in Germany.

All just the bluster of a megalomaniac newcomer? Analysts at the major Swiss bank UBS believe BYD and other Chinese competitors are capable of shaking up the market. According to a study, the share of Chinese companies in electric car sales in Europe could rise from the current 3 percent to 20 percent by 2030.

The pressure to sell is great for the Chinese companies. In China, car companies and start-ups have massively ramped up car production, and the factories are now churning out too many vehicles. Experts calculate that even at 80 percent capacity utilization, around 15 million more vehicles will be produced than the Chinese market can absorb. That figure would exceed the total annual demand for combustion and electric cars in Europe.

The reason for the overproduction: Almost all providers in China have state investors, either as joint venture partners or as major shareholders. It is in their interest to keep the factories running, even if there are no domestic customers for the vehicles. The government in Beijing wants to avoid unemployment and achieve the growth target of around 5 percent at all costs. This is another reason why BYD and the other Chinese cars are pushing onto the global markets – and causing a price war that some car company executives have described as a "bloodbath."

The fact that German manufacturers are giving them plenty of space is providing even more of a boost. BYD even ousted Volkswagen as a sponsor for the marketing of the 2024 European Football Championship in Germany.

The Chinese also see potential in the taxi sector. The Mercedes E-Class, the German cab model par excellence, has only been available as a luxury sedan since 2023, which provides a great opportunity for BYD to become visible in the cities. The aim is to "address the operators of these fleets in a timely manner," says Hedin manager Grindemann. The BYD importer can also imagine equipping the police in the future.

There is little resistance. The car trade is a major gateway. Mercedes-Benz wants to sell its own dealerships with 8,000 employees in Germany, whereas other dealerships traditionally associated with Mercedes have already opened up to Chinese suppliers out of necessity. They were initially hesitant as to whether they should place BYD models in their showrooms. "We are all very loyal to the brand and have the Mercedes star practically tattooed on our chests," says one Mercedes dealer representative. He says you don't just let BYD in for the fun of it. But in the end, he says, Mercedes-Benz had left the dealership operators with no other choice. In Germany, BYD is already cooperating with seven large dealership groups that once exclusively sold VW, BMW and Mercedes.

The Chinese carmaker gives dealers a great deal of freedom, including pricing.

A white Atto 3 Comfort, a compact SUV with a list price starting at just under 38,000 euros, currently offers a 3,000 euro trade-in bonus at the Stuttgart dealership, plus a few percent dealer discount. With comparable test results, this makes BYD about as expensive as an ID.3 from Volkswagen. However, unlike VW, BYD is still turning a healthy profit at the reduced price. And the Atto 3 is only the beginning.

In China, BYD is already selling what German manufacturers can't currently offer: an affordable mass model at a competitive price of less than 10,000 euros. The BYD Seagull will soon be available in Germany. The price tag is likely to be higher than it is in China. But even at 20,000 euros, the Chinese would still be undercutting all Western manufacturers.

The threat is so great that even Elon Musk is getting nervous. Speaking at an analyst conference, the Tesla boss recently said that the Chinese competitors are "extremely good." He warned: "If there are no trade barriers, they will pretty much destroy most of the other car companies in the world."

The European Commission is now examining the possibility of erecting just such a trade barrier. Since March 7, every electric car entering Europe from China has had to be registered by customs. According to a directive signed by European Commission President Ursula von der Leyen, many electric cars are imported from China at presumably subsidized prices. This would have a negative impact on employment and would lead to damage that is difficult to compensate for.

But even that won't be enough to stop BYD. The company already has an answer to the punitive tariffs: It is planning its own factory in Hungary, within the customs barriers of the EU. BYD could supply Germany directly from there.

Brown Out: Electric Shock Hits Mercedes

Around 30 minutes by car from the BYD dealership in Stuttgart, at the Mercedes-Benz training center in Vaihingen, Ola Källenius takes the stage. Despite his 6 feet, 4 inches in height, the chairman seems almost small next to the two electric cars beside him.

To his left, wrapped in camouflage foil, is the future electric version of the G-Class, an angular SUV. To his right, a Mercedes Sprinter delivery van, also battery-powered, towers over the German-Swede dual national. As Källenius presents the car manufacturer's business figures on this Thursday at the end of February, the vehicles are to convey their own silent message: The future of Mercedes will be powerful and electric.

But when will that time come? Sales of the two electric vehicle models are expected to begin this year. But it remains unclear when Mercedes will manage to switch completely to electric. Källenius would like to see the EU combustion phase-out in 2035 thoroughly reviewed once again. The electrification of his industry is "a Herculean task," he says, for the success of which many things have to go really well – which is not the case at the moment. He calls the German government's decision to abruptly end electric car subsidies "rather odd." The decision, he says, makes it almost impossible to make predictions for the next decade.

Mercedes' problems are not limited to Germany – and nor are politicians the only cause of them. In China, sales of the electric flagship EQS fell far short of expectations. Among other concerns, customers have complained about the lack of space in the back seat. For wealthy Chinese who like to be driven by a chauffeur, this is a reason not to buy the car. It almost seems as if Mercedes has lost touch with the needs of its affluent clientele.

Unlike VW works council head Cavallo, the Mercedes employee representatives think it is good to be cautious on the subject of electric vehicles. The EU is "currently the only economic area that has decided to ban combustion engines," says Michael Häberle, member of the supervisory board and head of the Works Council at the plant in Stuttgart's Untertürkheim district. He argues that Mercedes must be in a position where it can ramp up production of combustion cars or more electric vehicles, depending on the market situation. "We need to maintain this flexibility for as long as possible in order to organize the transformation properly."

A few years ago, automobile industry officials in Stuttgart had been singing a different tune. Shortly after taking his position in 2019, Källenius announced an "Ambition 2039" program. Within 20 years, the manufacturer of prestige cars such as the S-Class wanted to become CO2-neutral. Källenius later even promised to sell only electric vehicles in key markets by 2030. In the meantime, the automobile executive has only committed himself to the goal of selling a share of "up to 50 percent" of cars with electric motors in the second half of the decade. It's a target so weak that it's almost impossible he won't achieve it.

VW in Zwickau: What's Left of the Green Jobs Miracle?

The mood isn't great at Europe's first all-electric car factory. In 2019, Volkswagen opened production in Zwickau in the eastern state of Saxony, with much fanfare and then-Chancellor Angela Merkel in attendance. Today, the workforce fears for their future.

In Hall 5, robots assemble chassis and bodies, a manufacturing step known as the "marriage." But the romance in the marriages performed here is largely absent. Since 1904, the birth year of Saxony as a car manufacturing state, this step has included a large engine and an exhaust system, the pride of German engineers. But that has all changed now. The heart of the modern electric car is now a battery up to 1.85-meters long and weighing up to 450 kilograms.

In Zwickau, they were proud of their new beginning. "Tradition meets the future" is written on a large banner on the light gray factory halls. Here, where the first Audi models, later the East German national car, the Trabant, and then the Golf were once manufactured, VW has only been manufacturing electric cars for four years. For the company, this had been a world premiere that promised technical progress, good jobs and lasting prosperity in the region. VW invested 1.2 billion euros and increased its workforce by around 2,800 employees to around 10,500. A job miracle thanks to e-mobility, an East German success story.

And the workforce managed a record-breaking six production launches of new models in two years. A network of suppliers emerged around the plant, all preparing for the era of e-mobility.

These days, though, the magic has worn off. Instead of 360,000 electric cars originally planned, only 247,000 vehicles rolled off the production line last year. There is no improvement in sight. The three-shift operation, which had been developed in Zwickau over decades, is gradually being reduced to two shifts a day, and 1,500 employees with limited contracts are fearing for their jobs. VW has temporarily sent hundreds of employees back to the old car world. They are now helping out with the production of gasoline engines or combustion vehicles in Chemnitz, Hannover and Wolfsburg.

VW actually wanted to become a pioneer in electric cars and challenge Tesla head-on. But the company's expensive electric cars sell far worse than comparable combustion vehicles. If things continue like this next year, VW could find itself facing a fine of billions of euros. Starting in 2025, the EU will be tightening the CO2 fleet targets, which set precise specifications for each manufacturer for fleet emissions.

Smaller and cheaper electric cars for the masses could alleviate the penalty, but VW won't be launching those on the market until 2026: Initially the ID.2, for just under 25,000 euros, and around a year later — if all goes well — the ID.1 for 20,000 euros. Until then, the company faces the choice of pushing its more expensive e-models onto the market at slashed prices, risking high fines or hoping for leniency in Brussels. "E-mobility is the right technology for CO2-neutral mobility," says Thomas Schäfer, the CEO of Volkswagen Passenger Cars, "but under the current conditions, the necessary ramp-up will be more difficult and slower."

Plenty of frustration with the federal government in Berlin has built up among employees in Zwickau. There is also a fair amount of criticism of VW management and its model policy: The company lacks affordable models. They say the fact that VW is promising to build its next, technically advanced generation of electric cars in Zwickau in a few years' time isn't enough.

"We also need to upgrade our existing models in order to get our plant back to full capacity soon," says Zwickau works council Chairman Uwe Kunstmann. He even suggests that special editions like the "Golf Bon Jovi" of the 1990s are conceivable. A little more e-glamor, a little more speed.

Kunstmann speaks of a "tsunami" hitting the region. Under no circumstances does Zwickau want to go back to the combustion engine, says the employee representative. "We can only secure the future of the plant with electric cars." Up to 40,000 jobs in the region are dependent on the plant.

Indeed, the crisis at VW has become a political issue. Elections are slated to be held in Saxony in September, and right now the AfD is ahead in the polls. The far-right extremists are feeling positively triumphant. "The highly subsidized, green planned economy," they claim, has "failed across the board."

State Governor Michael Kretschmer of the center-right CDU still views the Zwickau plant as "a unique selling point that will provide us with security for the coming decades." At the same time, however, he criticizes the planned phase-out of combustion engines and what he believes to be the "excessive" political electric car targets being set in Berlin and Brussels. "They are a burden for companies and make us even more dependent on China," he says.

Many entrepreneurs in the region would like to see a little more optimism. They say that future technologies are being talked down, to the detriment of Germany's automobile industry.

"It would be a mistake to cling to the past," says Max Jankowsky, president of the Chamber of Industry and Commerce in the city of Chemnitz in Saxony and head of the medium-sized iron foundry Lößnitz, which is itself in the middle of the transformation. "The whole world is proving to us that e-mobility works," he says.

Jankowsky recently visited the factory of electric car pioneer Tesla near Berlin with his fellow colleagues at the chamber of commerce and was impressed. "They use state-of-the-art technology, and the people are highly motivated." What impressed him particularly: The workers on the line were listening to techno, like they were in a nightclub. Jankowsky saw that as a sign of "pure self-confidence." It's the kind of spirit that he feels is lacking in large parts of Germany.

A technological upheaval like the one the automotive world is currently experiencing is creating new players like BYD and Tesla and displacing old technologies, production locations and global market leaders. The economist Joseph Schumpeter called this "creative destruction." The exciting thing about such disruptive phases is their open outcome: The pioneers of yesteryear are by no means doomed – at least if they react decisively to change.

Amsterdam-based Stellantis has developed a successful business model out of necessity. With brands such as Opel, Peugeot, Citroën, Jeep, Alfa Romeo, Fiat and Chrysler, it generates returns that other mass manufacturers can only dream of. The company also wants to offer an electric car that costs less than 25,000 euros before the end of the first half of the year. The prerequisite for this is rigid cost discipline.

With this strategy, Stellantis has become a role model for VW. However, hundreds of suppliers are now suffering from the manufacturers' cost-cutting measures. And all this is coming as they themselves face the biggest change in their history.

Troubles for Suppliers

Jürgen Bischopink wanted to do everything right. The boss of automotive supplier Fiuka has had a new hall built right next to the old plant. The first machines will arrive in a few weeks, and then this future-oriented business will spring into action producing metal parts for a two-speed electric gearbox for Mercedes. "We will be able to produce 1.6 million components for 1.6 million electric cars here," says Bischopink.

But the pride of the entrepreneur, who tackled the change at an early stage, is overshadowed by a major concern: Electric cars made in Germany may not become the sales hit automobile manufacturers there are hoping for. He's not even sure if the plant will be fully utilized by 2028 as planned.

Fiuka is one of those model small to medium-sized enterprises that are regarded as the backbone of the German economy. In 1938, the Bischopinks and two other families founded the company in Finnentrop, at the heart of the Sauerland region, upgrading it to become a specialist for the automotive industry during the 1970s. Today, more than 500 employees generate an annual turnover of 154 million euros.

An industrial engineer, Bischipink has spent his entire professional life in these production halls – he knows every machine and can describe every process. He walks through the plant with quick steps. It smells of metal and the pounding sound of the presses fills the entire hall. Individual parts for nine-speed gearboxes for Mercedes are built here, from the C-Class to the S-Class. It has been a crisis-proof business for years, and the plant is still booming. But the business has an expiration date: 2035, the year in which – as things currently stand – the EU will phase out combustion technology.

In another production hall, "100% e-mobility" is written on a large white box. It contains what is known as a high-speed press and produces the wafer-thin sheets that are used for electric motors. But the blue belts that stick out of the machine like tongues and normally spit out the CD-shaped disks are empty. The machine is still.

"The capacity utilization is lacking," says the Fiuka CEO. "We know that electromobility is coming, which is why we have invested," he explains. "But battery cars haven't been as popular yet as originally thought."

In addition to the lull, the global balance of power is shifting. Two South Korean battery manufacturers are now among the 30 largest automotive suppliers in the world. The Chinese battery market leader CATL has moved up to second place in the world rankings. "The hard-won global market shares of German suppliers are being lost," write experts from management consultants PwC in a study. "The success of the last 20 years is in danger of being lost in a short period of time."

Many new rivals are still concentrating on Asia. But that could soon change. "Chinese car and battery manufacturers are increasingly bringing their suppliers to Europe," says Xing Zhou, partner at the consulting firm Alix Partners. Kedali, for example, the largest manufacturer of battery cell housings, has built a factory near Erfurt, less than 50 kilometers from a plant of the battery manufacturer CATL. "In 10 years' time, we will see a distinct Chinese manufacturer and supplier landscape in Europe," predicts Zhou.

Fiuka boss Bischopink has found his own answer to the problems of the transition to electric cars: He wants to become more independent of the car industry. The plan is to produce photovoltaic systems on a new production line. These days, you also have to penetrate additional markets, says the entrepreneur.

Rebooting the Auto Republic

Fiuka could be a role model for many industrial companies. Germany and its companies can't simply hope that things will somehow continue as before.

Some automobile industry executives are betting that the European Commission will weaken the CO2 targets in the short term. The industry could then bridge the electric car slump by selling gasoline and diesel engines for a few more years. But who would really be served by such delays?

The first answer to the biggest question about electrification is that Germany's economy has to become less dependent on the automobile – it needs to partially detach itself from its old leading industry, which is based on the combustion engine.

Even if BMW, Mercedes and VW can continue to keep up, there is a great risk that they will lose their technological leadership. When it comes to the battery, the heart of the electric car, the Chinese and South Koreans are much further ahead. In the future, German car manufacturers will be "one competitor among many," says Oliver Falck, the head of the Ifo Center for Industrial Organization and New Technologies.

Automobile production will continue to shift towards Asia. In 2023, only around 4 million cars will be built in Germany, the same level as in 1994. From economist Falck's point of view, though, this isn't as dramatic as it sounds.

The supply of labor in Germany is declining. Specialist staff need to focus on those parts of the electric car that create the most value, argues Falck: battery modules, for example, or control software. Germany can continue to play an important role in such high technologies in the future.

And that doesn't apply exclusively to the automotive industry. The industrial healthcare sector, for example, in medical technology and digital health, already employs significantly more people than the German automotive industry. Bosch, the world's largest automotive supplier, is working on quantum sensors that can be used in both mobility and medicine.

Siemens wants to lead industrial manufacturing into a new era with the help of AI. Many smaller mechanical engineering companies are investing in digitalization. With its laser technology, the optics specialist Zeiss has become one of the most important suppliers to the chip industry.

The second answer to the e-question is: Don't give up, the race hasn't been decided yet.

The Germans just got off to a sluggish start. But even the successful high-tech players from the U.S. are showing weakness. Apple recently discontinued its project to launch it's own car, which many in the industry had been trembling about – and wasted billions in developing it over the years. The American start-up Rivian, in which the tech giant Amazon has a stake, has just had to lay off 10 percent of its workforce.

Tesla also hasn't managed to produce an affordable mass market model yet, either. The times in which the electric car pioneer targeted 30, 40 or even 50-percent growth per year are over for the time being. Elon Musk isn't even daring to make a forecast for 2024. The Tesla boss has reduced the prices of his electric cars by several thousand dollars twice in recent months. The companies share price is currently only at half of its all-time high. Tesla also recently dropped out of the Top 10 most valuable U.S. companies. It's possible the company already has its best days behind it.

Customers are uncertain, and companies are wavering between overcapacity and sluggish sales. And for German car manufacturers, that could provide them with an opportunity to catch up. Renault boss Luca de Meo is proposing a European automotive alliance similar to Airbus in aviation. By joining forces, it is hoped that Volkswagen, Renault and Stellantis could stand up to the Americans and Chinese and provide the masses with affordable electric cars.

Ultimately, the Germans could even end up benefiting from cut-throat competition. In China, a number of start-ups that are not as strong as BYD are likely to go bust soon. That would provide VW, BMW and other German companies with the opportunity to then buy up their bankruptcy assets, including technology, software and patents. That, at least, is the prediction of one Chinese industry insider. The Germans' pockets, after all, are still deep, given that they still continue to sell plenty of cars with combustion engines. It would be an almost ironic outcome to the race: The latecomer, which has long let technological change slide out of complacency, would skim off the innovations of others.

Germany also still has the potential to leave everyone else behind.

In Zwickau, Saxony, just a few kilometers from the ailing VW plant, a 40-strong team of electrical engineers, computer scientists and economists developed "Erich." The black electric racing car accelerates from zero to 100 kilometers per hour in two seconds. It whizzes almost silently along the test track at the Zwickau University of Applied Sciences.