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This issue is supported by Berylls by AlixPartners

For today's newsletter I spoke to Dr. Andreas Collet. He co-authored the Battery Electric Truck series at Berylls by AlixPartners. His analysis and his numbers went into this issue.

Read the Battery Electric Truck series

Berylls by AlixPartners had no influence on the content of this newsletter.

Welcome to Issue #128 of The German Autopreneur.

We talk about China and electric cars a lot. But it's almost always about passenger cars.

Not today. Today it's about trucks.

And this is a completely unemotional market. Nobody drives down the highway thinking: what a beautiful Mercedes Actros. A truck is a tool.

But that tool carries 3/4 of everything moved on land in Europe. Your parcel, the shelf in the supermarket, all of it.

And right now this invisible market is going through the same 3 shifts as the car market: electric, software, autonomous driving. With the same challenger: China.

We've seen this film before. With cars, we're watching the ending play out right now.

So the question today: does the same thing happen with trucks?

To find out, I spoke to Dr. Andreas Collet. He's a commercial vehicle expert at Berylls by AlixPartners.

Today we'll look at:

• Why buying a truck comes down to the numbers and nothing else

• Why the electric truck gets cheaper than diesel before 2030

• And whether the Chinese are about to take over the European truck market too

A Market Without a Champion

So who is the Volkswagen or Toyota of the truck market?

The answer: there isn't one. What you get instead are 2 truths, and both of them hold:

1) By revenue, Europe leads:

• The biggest truck group in the world is Daimler Truck: around €49 billion in revenue and 420,000 vehicles sold in 2025. Mercedes still owns 1/3 of it

• Behind it: Traton (Volkswagen's truck arm, with MAN and Scania), the Volvo Group (the truck company, not the car brand) and the US group PACCAR

2) By units, China leads:

• Chinese manufacturers sell more than 1.1 million heavy trucks a year, around 70% of them at home

• Market leader Sinotruk alone accounts for around 300,000 of them

There is no global champion: the 7 biggest groups together hold less than 30% of the world market by revenue.

The market splits into separate worlds:

• Europe: Daimler Truck, Traton and the Volvo Group together hold around 2/3 of the market, and the Volvo brand leads with around 19%

• China: a world of its own. More heavy trucks are sold in China every year than the biggest Western manufacturer sells worldwide

Nobody builds a world truck. And the reason is simple: a truck for European highways is a completely different vehicle from one built for Indian roads.

That's the structure. But the part that really matters comes next.

Who Actually Buys a Truck?

We buy a car with our gut: brand, design, status. With a truck, none of that counts.

And the person who buys it isn't even the one who drives it: the trucking company orders, the driver drives. And the trucking company wants exactly one thing: for the truck to make money.

The calculation behind that is called TCO (total cost of ownership): the full cost over the truck's lifetime, usually around 10 years. And it splits roughly into 3 blocks:

• 1/4 purchase price

• 1/4 driver

• 1/2 operating costs: diesel or electricity, maintenance, tolls

These days the biggest block is operating costs. The purchase price is only 1/4 of the truth. Andreas puts it like this: whether a truck costs €50,000 more "doesn't really matter in the end." What matters is what it earns over 10 years.

And a truck only makes money when it's moving. One that stands still costs money. Which is why something else hangs on this calculation: trust.

The trucking company has to trust that its manufacturer keeps that truck running for 10 years. A workshop nearby, spare parts, someone who turns up when something breaks.

Nobody pays extra for the logo on a truck. But everybody pays for that trust. It's the real moat in this market.

But that whole calculation is about to change. In 3 places at once.

Trucks Face the Same 3 Shifts as Cars

With cars, we always talk about 3 big technology shifts:

• from combustion to electric

• from hardware to software

• from driving yourself to autonomous driving

So let's apply the same 3 to trucks.

1. Electric

For trucks, electric is a done deal too. And the reasons are the same as for cars: regulation and cost.

The regulation: trucks are only 2-3% of the vehicles in Europe, but they cause around 25% of road emissions. Which is why the EU set fleet targets for trucks as well: -45% CO2 by 2030, -90% by 2040.

The cost: Berylls by AlixPartners worked it out per kilometer for European long-haul:

• 2025: diesel €1.35/km, electric €1.42/km

• 2030: diesel €1.42/km, electric €1.28/km

• 2035: diesel €1.49/km, electric €1.13/km

So before 2030 the electric truck becomes cheaper than diesel in long-haul. And as we know: this market runs the numbers ruthlessly.

But what about range? That's exactly what I asked Andreas.

His answer: a modern electric truck does 400 to 500 km in real conditions. The top models manage 700 to 800. A driver hardly ever needs more: after 4.5 hours at the wheel, EU rules force a break. Andreas: "Usually I don't need the 800 kilometers of range, because I'm not allowed to drive them."

And the truck charges during that break anyway. So the real bottleneck is the charging infrastructure, not the range.

2. Software

With cars, the car itself becomes a software product. We know the game: updates over the air, and the car gets better after you buy it.

With trucks, software counts where it saves money: fleet management and remote maintenance. Both keep the truck on the road. And software is the ticket into the biggest shift of all:

3. Autonomous driving

1/4 of the cost is the driver, and autonomous driving wipes out that quarter.

And then there's the driver shortage. Europe and the US are already short of drivers today. And by now it's gotten so bad that good drivers pick their trucking company. Not the other way around.

Autonomous driving solves both at once: the cost and the missing drivers. Which is why for trucks it's a business model from day 1.

And it's already happening. The 2 most important players are in the US: Aurora and Kodiak. Both run real freight with nobody in the cab. Aurora on public highways, between Dallas and Houston. Kodiak off the public road network, in the oil fields of Texas. In other words, where the conditions are easier.

So with trucks we're at the same point as with cars: the technology is right at the edge of scaling.

China is testing at scale too, but mostly still with a safety driver on board. In Europe there are only a handful of pilot projects.

Is China Taking Europe's Truck Market Too?

With cars, China is the disruptor. In just a few years the Chinese built an entire car industry from scratch. They overtook the established players on cost and technology. And now they're pushing out into the world market.

With trucks, they're running the same playbook.

So let's start by looking at the Chinese truck market:

• 29% of new heavy trucks in China run on electric or plug-in hybrid (most of them fully electric). In December 2025 it was even 53.9%, just before a subsidy ran out

• More than 400,000 electric trucks were sold in China in 2025, across all size classes. That's more than 90% of the global volume

• But you don't see much of it on the road yet: only around 4% of all trucks in China run on electric. And the switch is only just starting

• By 2030, 40% of new heavy trucks are meant to be electric. That's what China's current plan says

What drives all of this is the battery: the biggest cost block in an electric truck. And no country controls it the way China does. Around 80% of the global battery supply chain is in Chinese hands.

And you can see it in the price: a Chinese electric truck comes in around 30% below a comparable European model. At an average of around €320,000, that's roughly €100,000 less.

My first reaction: but they can't match the quality of a European truck. Right?

Andreas on that: "That's a bit of the old arrogance talking."

The Actros was the benchmark for decades. Andreas says that gap is basically gone today: "One to one, just like in passenger cars."

We can see how that plays out with buses. Technically a bus is almost a truck. And Chinese electric buses have been running through Europe for more than 10 years, including in German cities. But they still haven't taken over the market.

And the next step is already under way. The Chinese are building in Europe:

• BYD is massively expanding its commercial vehicle plant in Hungary

• At the former MAN plant in Steyr (Austria), Steyr Automotive now assembles trucks for Chinese manufacturers. One of them looks almost exactly like a MAN. Deliberately, of course

None of this is about dodging tariffs, by the way. The EU tariffs on Chinese electric cars only apply to passenger cars. On trucks there's just the normal import duty of around 10%.

So why build in Europe if they don't have to?

Because they're building the one thing you can't export: trust. The service network, being close to the customer. Someone who's there when the truck breaks down.

With cars they learned one thing: the best price is worth nothing if the customer doesn't trust you.

So with trucks they're turning it around: trust first, volume second.

And you can see it in 2 numbers:

• So far the Chinese have sold almost nothing in Europe: Steyr Automotive assembles around 800 trucks a year, MAN builds more than 60,000

• But the service network is already there: through partnerships they have around 700 service points. Daimler Truck has around 3,000

And if they want it to go faster, they might simply buy that trust. With cars it went exactly the same way: Geely bought Volvo Cars, SAIC bought MG.

And Andreas says the Chinese attack on Europe doesn't even show up in the big market forecasts. Not yet.

But everyone knows by now that they're coming. Daimler Truck CEO Karin Rådström says: "I expect an offensive in trucks as well." And: "It's up to us to be prepared."

At the end I asked Andreas one last thing. The Chinese build the cheaper product, at the same technology and the same quality. So won't they simply run Europe over?

My Take

So: with trucks, the same thing is happening as with cars. Only faster. Probably much faster. You barely notice it yet. But that's most likely just the calm before the storm.

Why faster?

With cars, the brand was a shield. Even when the Chinese had the better technology AND the lower price, customers stayed with the brands they knew. The reason was the brand. The status. The habit. The trust.

That shield bought the carmakers time to catch up on price and technology.

With trucks, that shield doesn't exist. Here only the numbers decide. Whoever makes the better offer gets the order. Which is why the truck market is probably far more open to attack than the car market.

And there's something much bigger behind all of this. Talking to Andreas really drove that home for me.

More than 15 years ago, China started building the complete battery supply chain. From the mine to the finished cell. With enormous amounts of money, years without profit. But with a goal that was bigger than the car.

Because the battery reaches far beyond the car. It's the basis for almost everything that's going electric right now. Cars need batteries. Buses need batteries. Trucks need batteries. And the charging hubs that are supposed to charge all of it? They need huge energy storage. Which again means batteries.

In the end it all comes down to the same thing: everything needs batteries. And the batteries come from China.

And that was the brilliant move. China was never only after the car market. It was after everything that hangs off the battery. And that plan is working out right now.

And yet Andreas ends up surprisingly optimistic.

His argument: this time we know the script. With cars, we didn't take China seriously. With trucks, we know exactly how it runs. Through price. Through local production. Through bought trust.

And we know where our lead is. In trust. The service network, being close to the customer, 10 years of reliability. Exactly what China still has to build up or buy.

And there's one more thing: a Chinese truck still has to prove it's worth something after 10 years. As long as that residual value is unclear, it stays a risk in the TCO calculation.

That gives Europe a lead. But of course only for a while. We had one with cars too. And we didn't make the most of it.

This time we know better. We've seen this film before. Now it's running again. Only now we know the ending. And we can prepare.

PS: This is the last issue before the summer break. See you in September 🏝️

🔗 be | iea | ic | eu | he | el | ma | au | cv

That’s all for today.

Until next week,
Philipp

And as always: If you find value here, share it with someone who should read it too. That helps me a lot.

Everything else I’m working on is here →

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Welcome to Issue #127 of The German Autopreneur.

Early July, in Sindelfingen. That's the town near Stuttgart where Mercedes runs one of its largest plants. Around 20,000 workers stood outside the gates and chanted: "Ola out." Ola Källenius is the CEO of Mercedes.

The trigger was an email. The sender: the entire board. The recipients: every employee in Germany.

The key line: "We should all work more, in every area, for the same money."

For many, that means going from 35 to 40 hours a week. 5 more hours for the same pay.

Over the past few weeks, a lot of Mercedes employees have written to me. The message was always the same. Look at what's happening here.

Mercedes calls the plan a "productivity offensive." Insiders tell me it will backfire.

Today I'll look at:

• What the board's email really says

• Whether more hours actually make Mercedes more productive

• What Mercedes actually needs

Mercedes Blames Everyone but Itself

The email opens with pride. 100 years of Mercedes-Benz: "We know how history feels."

A few lines later, the message changes. Now everyone has to work more. For the same pay. Roll up your sleeves. That's the board's answer to the crisis.

The board names 3 causes:

1. Tariffs and geopolitics

2. The price war in China

3. Germany as an expensive place to build cars

And the numbers are brutal:

• 837,200 cars sold in the first half, 7% fewer than a year earlier

• China keeps sliding: 28% fewer cars in the first half, and 30% fewer in Q2

• Auto margin of 4.1% in Q1, down from 7.3% a year earlier

• Pure EV share of 11.6% in the first half (BMW: 17.7%)

So the crisis is real. But according to the board, the causes sit mostly outside the company. Plus one inside: Germans don't work enough.

Why Germany? The board says 2 of 3 employees work here, but only 15% of its cars sell in Germany.

Germany is too expensive and the plants are too big. So Mercedes is moving work abroad. The email says it plainly. More product and admin work will go to other countries.

At the same time, Mercedes is expanding its plant in Kecskemét, Hungary. About $1.1 billion is going in. The site will more than double in size. It will become the largest Mercedes factory in Europe.

So German workers should work more. For the same pay. Does that fix the crisis?

Mercedes and Its Bullshit Culture

Productivity comes down to 1 question. How much comes out for the hours that go in?

Mercedes' plan adds hours. But nothing more comes out per hour. So this isn't a productivity offensive. It's a working-time offensive.

Mercedes never had a problem with the number of hours. The problem was what happens inside those hours. I worked there myself for almost 10 years.

In a company that size, a large share of the work creates no value. People work on the process, not the product.

Steve Jobs once put it this way: "People get confused that the process is the content." As companies grow, they build processes. The goal is to make their own success repeatable and to avoid mistakes.

But at some point they treat the process itself as the goal. And they forget what it was all about. The product.

That's exactly what happens at Mercedes. Everyone follows the process. Because it has always been done that way. Not because a better car comes out at the end.

One example. Purchasing has a fixed target: negotiate 20% off every contract. The suppliers know this. So they add 20% up front. Purchasing negotiates it back down and reports the target as met. The supplier gets the price it wanted. The final offer is the same as before. Nobody saved anything. But the metric looks good. And everyone is happy.

This pattern runs through the whole structure. A company like this has dozens of divisions and departments. Each one works for itself, in its own silo. Every silo has its own language, its own acronyms, its own routines. A newcomer needs months to understand the language.

For the silos to work together at all, you need translation. And that happens in committees. Every decision gets a PowerPoint, gets discussed in one committee, and gets passed up to the next. A single decision wanders from meeting to meeting for months.

It's work. Everyone is busy. But none of it reaches the customer.

On top of that, many people sit in roles they aren't qualified for. They slid into these positions over the years. Through reorganizations, or simply because they had been around a long time.

Often they don't really understand their own field. So they talk about what they do understand. Processes, formats, wording.

And where the expertise ends, the buzzwords begin. Suddenly everything is "data-driven," "customer-centric," "AI-powered." It sounds cool. It sounds like innovation. But it's usually an empty phrase. People fake innovation by using "innovative" words. Nothing actually happens.

This culture even has a name. Former Daimler CEO Jürgen Schrempp once called his own headquarters the "Bullshit-Castle."

The productivity offensive changes none of this. More hours on top of a broken way of working don't produce a better result. Just more of it. More meetings, more PowerPoints, more bullshit.

The way Mercedes works is the problem. Not the hours. And this offensive hits the wrong people.

The Cuts Always Land at the Bottom

The high performers pay for it.

The 35-hour week was never what employees wanted. Mercedes made it the rule. Many wanted to work more. But they weren't allowed to.

Only the best got 40 hours. As a reward. More hours, more money.

Now those are exactly the people who lose out. They keep the 40 hours. But their pay drops by 12.5%.

Everyone else is supposed to work longer. On top of that, Mercedes is pushing its annual bonus into next year. Or scrapping it altogether. And it's cutting remote work sharply.

For shareholders, it looks different. In April, Mercedes paid out about $3.6 billion in dividends. Even though its profit had just been cut in half.

Around 20% of that goes to two large Chinese shareholders: Geely and BAIC. Both are building competing brands at the same time. So it goes to the very players Mercedes blames for the crisis.

Here's what a company insider told me:

• "One savings program follows the next. Nobody takes the board's announcements seriously anymore"

• "The board asks us to give things up. But it doesn't lead by example." (Ola Källenius paid himself about $9.5 million for 2025)

• The cuts always land at the bottom. At least that's how it feels to everyone

• "The productivity offensive will lead to less productivity. That was a massive management mistake, if that was the real intention"

If. Because maybe this isn't about productivity at all. Mercedes wants to cut staff in Germany. And that's nothing new. In the last year alone, the workforce shrank by more than 10,000.

Now even more are supposed to leave. Under the savings program "Next Level Performance," Mercedes recently ran a buyout offer. Some who left voluntarily got more than $550,000. But too few took it. 5,500 out of around 40,000.

Mercedes wants to get rid of its people. But the people want to stay.

And Mercedes can't just fire them. A job guarantee runs until 2034.

That leaves one path. Make the job so uncomfortable that they leave on their own. More hours, less remote work, no bonus, no future.

Read the measures that way, and they suddenly make sense.

But whether it's more hours or fewer people, both miss what Mercedes really lacks.

The Transformation Theater

The email tells the workforce what to deliver to fix the crisis. But the workforce didn't cause it. And if you didn't cause a problem, you can't really fix it.

So let's flip the question. What would the board actually have to do?

Mercedes has 2 real problems:

1. The company has fallen behind on the future technologies: batteries, software, and AI. That's why sales are collapsing in its most important market, China

2. To catch up, Mercedes would have to turn from a hardware company into a software company. It has been failing at exactly that for 15 years

Part of the problem is that there's no vision for the future. Why should anyone still buy a Mercedes in 2030?

Mercedes made plenty of bets on the future. Then scrapped almost all of them again.

The company has no strategy and no plan.

With a brand like Mercedes, you don't just buy a car. You buy the myth. You buy what it stands for. And when Mercedes no longer knows that itself, it burns its most valuable asset.

Mercedes knows it should change. But Mercedes doesn't want to change. So it takes the middle road. It fakes change.

It talks about change, renames things, builds new buzzword slides. Then keeps working exactly as before.

Why? Fear of losing power. Real change would break up power structures. Many managers rose through the old system. Today they're the ones in charge.

An insider put it this way. Mercedes couldn't afford the really good software people even 10 years ago. They've been gone for years. And the ones still there just want out.

One fitting detail. The CIO was supposed to drive this exact transformation. She's leaving on September 1. Her own decision.

In the end, it's a leadership team that won't push change through. And an organization that only pretends to. Everyone talks transformation. And keeps working the way they always have.

My Take

No question, the pressure is real. Mercedes has to act. But this offensive is the wrong answer. To me, it's mostly one thing. Posturing. The board shows toughness and a will to act. But it changes nothing about the structural problems.

The fix is fewer meetings, fewer silos, less bullshit. That does far more than 5 extra hours a week.

But the bigger question runs deeper. How does a hardware company become a software company?

And it looks like the German carmakers have already answered that for themselves. Their answer? Not at all.

Nobody has ever turned an old industrial company into a software company. There's no precedent for it. In any industry.

If that's true, the offensive suddenly makes sense. Then it isn't about productivity. It's about shrinking the old German part as much as possible and building something new somewhere else entirely.

With new people, without the old culture. No longer in Germany. What stays here is just the cuts.

But wherever they start fresh, one question remains. Not: how do we squeeze out more hours? But: who do we want to be in 2030?

That's the email the workforce is really waiting for. But it won't come. And the reason is sad. There is no answer. Mercedes has no vision.

The world has changed. And with it the car business. Different skills matter now. Different experience.

And it's not only the regular employees struggling with that. It runs through every level. From middle management up to the board.

That's not an accusation. Many did a great job for decades. They made "Made in Germany" what it is.

But for today's challenges, many of them are no longer the right people.

In the end, only the board can solve this crisis. Not the workforce. But for that it would need the right people. And an idea of the future. Mercedes has neither right now. And 5 more hours a week won't change that.

🔗 wiwo | hb1 | hb2 | re | ts | bi | cio | mb

That’s all for today.

Until next week,
Philipp

And as always: If you find value here, share it with someone who should read it too. That helps me a lot.

Everything else I'm working on is here →

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Welcome to Issue #126 of The German Autopreneur.

The world's biggest car market is crashing. In the first half of 2026, car sales fell 20%.

In Germany, the story often goes like this: The bubble has burst. China inflated it with subsidies for years. Now the money is gone. And everything is collapsing.

At the same time, China's auto industry has never been stronger: record exports, record market share at home, record EV share.

How can both be true?

Today I'll break down what's really going on. Where China's car market stands in the summer of 2026. And what's behind the headlines:

• Why the crash is no accident

• Why German brands barely exist in the market that's growing

• And why China's best-selling car isn't a Chinese brand

China's Car Market Lost 20% in 6 Months

The first half of 2026 (retail sales to end customers):

• 8.75 million cars sold. Down 20% from a year earlier

Here's what June looked like:

• -21% vs. June last year. The 9th straight month of decline

• +9% vs. May

• 1.04 million NEVs sold in June (-7%). NEV means new energy vehicle: an EV or a plug-in hybrid

• 62.8% of all cars sold in June were NEVs. The 3rd straight month above 60%

So: 1/5 of sales is gone. In one year.

Sounds dramatic. 2 things are behind it:

1. The first one is easy to forget. China is still in an economic crisis. It has been since the property bubble burst in 2021 (think Evergrande). Almost 1 in 6 young Chinese still can't find a job. If you're worried about your job, you don't buy a new car. You save. For context: the average urban salary in China is around 6,000 yuan a month. About $850

2. The second one is the immediate trigger. At the end of 2025, China cut back its car-buying incentives. One example: EV buyers were exempt from the purchase tax for over 10 years. Since the start of 2026, they pay 5%. Anyone who wanted a car anyway bought one in 2025. Those sales are missing now

But the state didn't cut that money by accident. Behind it is China's industrial playbook, a pattern I've covered here many times:

1. The state pumps subsidies into a market

2. An oversupply builds up, with far too many manufacturers

3. The state pulls the subsidies back

4. The market sorts out the weak

And there's a lot to sort out. China still counts 129 EV brands. AlixPartners expects only about 15 of them to make money by 2030.

So the crash is partly intentional. The low point was in February. Since then, the market has been recovering month by month.

But there's something else: the market didn't crash evenly.

China Has 2 Car Markets

Look at the powertrains: combustion cars fell much harder than NEVs. And that's tipping the whole market toward EVs.

Recently I read: "EVs have overtaken combustion cars in China for the first time."

That confused me for a second. Didn't that happen already?

Here's what actually happened:

• NEVs overtook combustion cars back in 2024

• Pure EVs (BEVs) only did it in April 2026. For the 1st time, more pure EVs were sold than combustion cars

• Plug-in hybrids resolve the apparent contradiction: pure EVs and pure combustion cars are each still below 40%. All NEVs together hit 63%

So: the incentives are being phased out. And the EV share keeps rising anyway. The shift to EVs is now self-sustaining.

But here's the real split: in China, combustion and electric split into 2 separate markets, with different players:

1. The combustion market: home turf of the foreign brands. VW and Toyota fight over a pie that shrinks every year

2. The NEV market: now the bigger one. And firmly in Chinese hands

At first glance, only the powertrain separates the 2 markets. In reality, it's something else. What defines an NEV in China is software and AI. The Chinese have a name for it: smart car.

That's why the real battle in China is no longer combustion versus electric. It's dumb car versus smart car.

You can see how separate the 2 worlds are in the bestseller lists. Only 3 groups appear in both the combustion top 10 and the NEV top 10: Geely, SAIC, and Chang'an. All 3 Chinese. Not a single foreign brand makes both lists.

For the German brands, that's bitter. The NEV market is growing. And they barely exist in it.

And even in the shrinking combustion market, they're losing ground: last year, Mercedes was still in the top 10. Now it's not. VW is still the number 1 there. But that's the market that's shrinking. Not a single German brand has made the jump into the growing one.

Back to the overall market. One number doesn't fit the picture: retail sales to Chinese customers fell by a good 20% from January to May. But China's factories built only 4.2% fewer cars.

Someone is buying those cars. Just not Chinese customers. So where are they going?

Every 3rd Car Leaves the Country

The answer: the rest of the world. The export numbers, January to May:

• 4 million vehicles exported (+63%)

• 930,000 of them in May. A new monthly record

• 35.4% of all deliveries now go abroad. The 2nd straight month above 35%

• 45% of exports are NEVs (2021: 15%)

China's biggest car exporter is Chery. Not BYD, as many assume.

The comparison with 2024 shows how fast this shift is moving:

The domestic combustion market shrank from 5.8 to 4.2 million vehicles (January to May, 2024 vs. 2026). More than 1/4 gone. In just 2 years. NEV exports more than tripled over the same period.

In plain terms: China's auto industry has swapped out its growth engine. From domestic sales to exports. That's why it can absorb the crash at home.

The top export destinations (January to May):

• Brazil is the new number 1 with 295,000 vehicles (+215%), overtaking Russia

• Algeria is up 380%

• Europe keeps buying despite EU tariffs: Belgium, Italy, and Spain are near the top. The UK has no tariffs and sits in 3rd place

• Only Mexico collapsed, down 37%. The country was long China's backdoor into the US market. Under US pressure, Mexico raised tariffs on Chinese cars to 50%. That door is closed for now

The crash at home is pushing China's carmakers abroad, not slowing them down.

Which leaves the question: how are the foreign brands doing in China?

Only the US Brands Are Still Growing

The honest answer: badly. 6 years ago, Chinese brands held a good 1/3 of their own market. Foreign brands held almost 2/3. Today it's the other way around: 71% is in Chinese hands.

The breakdown by brand origin (factory deliveries January to May, vs. a year earlier):

• US brands: +13.2%

• Chinese brands: -3.2%

• Japanese brands: -14.1%

• German brands: -24.9%

For context: these are deliveries from the factory, including exports.

The Germans are losing the most. The US brands are growing in the middle of the crash.

The US growth is mostly Tesla.

In Germany, you often hear: the Chinese simply don't buy foreign cars anymore. Because the state wants it that way.

That's the comfortable explanation. The catch: it's wrong.

The Model Y was China's best-selling car in June. Not the best-selling EV. The best-selling car across all powertrains. And it was the most expensive car in the entire top 10.

So Chinese buyers do buy foreign cars. As long as the product is right.

To be fair: Tesla is under pressure too. Sales to Chinese customers are down for the year. Xiaomi in particular is taking its customers. The growth comes mostly from exports out of the Shanghai plant. Around half the cars built there go abroad.

Still: no other foreign brand has an EV the Chinese actually want.

That's the view by model. Who leads the overall market? The top 3 across all powertrains:

1. Geely

2. VW

3. BYD

For years, VW was the number 1. Now Geely leads. BYD had even overtaken VW for a while. Right now, BYD is back in 3rd place, behind VW.

VW being back ahead of BYD says little about VW's strength. It says more about BYD's weakness.

No company got hit harder by the subsidy cuts. BYD builds no pure combustion cars, only EVs and plug-in hybrids. So the subsidy stop hits its entire business.

In China, BYD lost around 40% in the first half. Only exports cushioned the blow: sales abroad grew more than 70%. It's BYD's 1st half-year decline in 6 years.

The Germans Sell the Wrong Car

The German problem is structural. They sell almost nothing but combustion cars. In pure EVs, they hold around 1.6% combined.

And that's despite their EVs catching up on the basics: range and charging times are now competitive. The Achilles heel is what makes a car smart in China: software and AI. That's exactly where German EVs fall short.

The Germans now build good EVs. But for Chinese customers, they're dumb cars. And China doesn't buy dumb cars anymore.

The result: it's going downhill. And it's getting faster, not slower.

Mercedes and VW reported their half-year numbers this week. Both show the same thing: the decline in China keeps accelerating:

• Mercedes: -19% for all of 2025, -27% in Q1 2026, -30% in Q2

• VW: -36.6% in Q2 alone. More than 1/3 gone

BMW is holding up best on sales. But it's tipping there too: a few weeks ago, BMW issued a profit warning, mostly because of China.

BMW and Audi haven't reported yet. Right now, nothing suggests the downtrend is stopping.

My Take

For me, the most interesting insight here is the Model Y.

That one car destroys 2 myths we like to tell ourselves in Germany:

1) The Chinese don't buy foreign cars anymore:

Supposedly because the state wants it that way. Except China's best-selling car is a Tesla. Despite all the conflict between China and the US. That should be the end of the myth.

It survives anyway. Because it's comfortable. It shifts the blame away from the product and onto politics. Then nothing has to change.

2) In China for China:

For years, the German industry has told itself: cars for Chinese customers can only be developed in China.

Tesla disproves that too. They develop in California. And they're the number 1 in China.

So it's not about location either. It really is about the product.

The real question is: why can't Germany develop a good product anymore?

Because we've been failing at one thing for 15 years. The thing we call digital transformation. Turning a mechanical engineering organization into a software organization.

A smart car is above all a software product. And you can only build one with a software organization. We don't have one.

And why can't we build one? That's also on us.

We're attempting the rebuild with the very people who made their careers in the old system. They sit in the decision-making positions of the German car groups today.

For them, a real software organization is a threat. It means losing power and authority.

One more time: the biggest transformation of the German auto industry is a software transformation.

And the job of delivering it sits with a massive organization of mechanical engineers, controllers, and MBAs.

I keep coming back to one sentence I heard from Michael Fait, someone who builds car software for a living: "You don't even know what good looks like."

I can't get that sentence out of my head. Because it captures our problem so well.

We're supposed to build a product that's fundamentally software. With people who never really understood software.

Not because they aren't smart. Because they come from a completely different world, shaped by a different system.

And if I don't fully understand what a good software product is. Or what makes a good software organization.

How am I supposed to build one?

How am I supposed to make the right decisions?

That's the biggest problem in the German auto industry.

We have mechanical engineering companies that need to become software companies. And a whole generation of mechanical engineers flailing at it.

And yet, Tesla gives me hope.

They prove it doesn't come down to external conditions or politics. It just comes down to the product.

A good product sells in China. No matter where it comes from.

So this is completely in our own hands.

China is still buying cars. Just not dumb ones.

PS: My partner IPG Automotive just published a whitepaper on modern testing strategies in vehicle development. Read it for free (ad)

🔗 am | cp | ev | nt | rw | nk | re1 | mm | re2

That’s all for today.

Until next week,
Philipp

And as always: If you find value here, share it with someone who should read it too. That helps me a lot.

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Welcome to Issue #125 of The German Autopreneur.

What a week for VW:

• Up to 100,000 jobs could go

• 4 plants are at risk

• VW is ending its self-driving alliance with Bosch

• And it's selling off entire parts of the group

In the middle of all this, one sentence. Moritz Schularick is one of Germany's most respected economists. His prediction: "VW will probably be bought up by a Chinese carmaker. BYD, for example."

Sounds like the end of VW. Today I'll look at whether there's anything to it:

• Why VW has to buy its future technologies instead of building them

• Why the rescue plan from China could backfire

• And the 3 scenarios for how this could end for VW

What's Actually Happening at VW

One step at a time:

1. Up to 100,000 jobs could go:

VW employs 657,000 people worldwide. That would hit almost 1 in 6 jobs. It's not confirmed yet. The supervisory board meets on July 9.

2. 4 German plants could close:

The same leak names Hannover, Zwickau, Emden, and the Audi plant in Neckarsulm.

3. VW is buying its self-driving technology instead of developing it:

In 2022, VW started an alliance with Bosch. Around $1.7 billion reportedly went into it. Now the alliance is over. VW plans to buy the technology from partners instead of developing it in-house. At least for Level 3 and up, where the car takes over the driving.

4. VW is selling off parts of the group:

VW is selling whatever can be sold: engine maker Everllence (majority stake to a financial investor), design subsidiary Italdesign (to a US company), IT consultancy MHP (buyer wanted). Even stakes in battery subsidiary PowerCo and robotaxi subsidiary MOIA are up for debate.

5. VW wants to bring cars developed in China to Europe:

Until now, the rule was: developed for China, sold in China. Reports say the board is now considering the opposite.

6. VW is restructuring into a holding company:

The Volkswagen brand is set to become its own legal entity.

That's a lot for one week. From the outside, it looks like chaos. What's behind it? And how does it all connect?

Why VW Has to Buy Its Future

As with most problems in the German auto industry, the story starts in China.

For decades, China's car market was firmly in foreign hands. Mostly German ones: VW was the number 1 there for almost 40 years.

Then China built its own auto industry and took the market back:

• In 2019, VW still delivered 4.23 million cars in China

• In 2025, it was 2.69 million. A drop of more than 1/3

• And the curve keeps pointing down

China is the epicenter of the VW crisis. There's just one problem: it doesn't stay in China. China's new auto industry is pushing into almost every market in the world. The real danger for VW: what happened in China could now repeat everywhere. Market by market.

But why are Chinese brands winning market share everywhere? Because they've overtaken the established carmakers in the technologies that will define the car.

And there's a reason for that. The product itself has changed:

• Engine, transmission, and chassis used to make up a car's value

• In the new car, it's battery, software, and AI: soon up to 80% of the value

That's what the Chinese have mastered. And where VW is behind.

Catching up on its own didn't work. That was CARIAD: VW's in-house software subsidiary swallowed billions and still didn't deliver a competitive product.

The change in strategy came 2 to 3 years ago. Stop developing. Start buying. From partners who already know how:

• In the US, VW bought into Rivian: Rivian has exactly the software architecture for the new car that VW wanted to build itself with CARIAD. VW is investing up to $5.8 billion and is now Rivian's largest shareholder with almost 16%

• In China, the partner is Xpeng: same principle as with Rivian. VW holds almost 5% and is building a platform for the Chinese market with Xpeng. The technology comes from Xpeng

Which leaves one question: why is VW buying the same technology twice? Once in the US, once in China.

The answer: VW would probably love to buy everything in China. It's cheaper. The problem: the US is locking Chinese vehicle technology out. From model year 2027, connected software from China is banned. From 2030, the hardware too.

Polestar shows how serious this is. The brand belongs to China's Geely Group. At the end of June, the US government decided: from model year 2027, Polestar can't sell new cars there anymore. Chinese technology in the car now means no US market.

So VW pays for both: 2 partners, 2 separate platforms. The industry calls them tech stacks. One for China, one for the US. So far, so smart.

The plan has one catch. A carmaker that buys its core technologies has no edge of its own anymore.

For comparison: BYD builds around 80% of its cars itself. VW has always built more like 1/3 in-house, with suppliers delivering the rest. And that share keeps shrinking, because the new core technologies now come from outside too. VW contributes less and less to its own car.

VW is becoming interchangeable.

And still, VW is going one step further: it now wants to bring that Chinese technology to Europe.

The Rescue Plan From China

Some even see this as the rescue. Olaf Lies is the premier of Lower Saxony. The state co-owns VW, and Lies sits on its supervisory board. His hope: affordable models with technology from China keep the German plants busy. And save jobs and sites.

At first glance, that sounds logical. In China, VW is already developing cars with Xpeng. They're technologically ahead of anything VW builds in Europe, and cheaper. So why not sell them here too?

Because there's a Trojan horse in this rescue plan: Chinese technology with a German logo.

Audi shows how that plays out. Audi lost massive market share in China. So it tried something new: a separate brand built on the technology of its Chinese partner SAIC. Design and logo come from Audi.

But customers quickly noticed there's a Chinese car underneath. The models are selling poorly. So far, the plan hasn't worked.

And that's the move VW now seems to be planning. Only bigger. And this time in Europe.

The timing makes it even riskier. The China business is breaking away. That makes its home market more important than ever. For VW, that market is Europe. But Chinese carmakers are expanding aggressively into Europe right now.

And with a move like this, VW would make Chinese technology mass-market overnight. Customers don't know Xpeng. But they know VW. And they trust VW.

The danger: Xpeng already sells its cars in Germany today. Once customers realize the same technology sits in both the VW and the Xpeng, at some point they'll buy the original. Just like Audi in China. VW would be opening the door for its own competitor.

And it's not just VW. Stellantis already sells cars from Chinese carmaker Leapmotor in Europe. And Leapmotor's technology is even set to appear under the Opel brand in the future.

The tragic joke: Europe's carmakers are afraid the Chinese will overtake them in Europe. So they climb into bed with "the enemy."

That's why this plan is a tightrope walk. It can keep plants busy and save sites. Or it lets Chinese technology flood into Europe and makes VW interchangeable for good.

Either way: a carmaker that buys its technology instead of developing it needs fewer people. By that logic, VW should be shrinking.

Why VW Isn't Allowed to Shrink

VW's plants can build around 12 million cars a year. VW builds around 9 million. And according to CEO Oliver Blume, that's not going to change.

Add a problem VW has been dragging around for a long time. With the profits from China, the group built up a huge, bloated organization in Germany over decades.

Too much administration, too many overlapping structures, too many people. For a long time, nobody noticed. The profits from China covered it. Now the profits are gone. That bloated organization is still there.

So VW would have to shrink. But VW isn't allowed to.

Because VW is not a normal company. Honestly, VW is partly the very thing the West likes to accuse China of: a half state-owned carmaker.

The German state of Lower Saxony holds around 20% of the votes. And since 1960, there's been the Volkswagen Act. A law written for this one company. It lets Lower Saxony block any major decision about its plants and sites.

Then there's German co-determination: the works council and the IG Metall union hold half the seats on the supervisory board. Closing a plant against your own workforce is impossible.

So VW's mandate was always bigger than pure profitability: protect jobs, even when they no longer pay for themselves.

One VW CEO already failed at this: Herbert Diess. He wanted radical cuts and lost the power struggle against these structures. In 2022, he had to go.

His successor Oliver Blume is now trying the same thing. And this time, the pain is big enough that it might work.

Because by now, everyone gets it: without hard cuts, VW won't make it out of this. But nobody can say yes openly. Their own people would tear them apart.

That's what the restructuring solves: VW is turning the Volkswagen brand and the components division into standalone companies. What's left is a holding company that just owns the shares.

Officially, this is about competitiveness and market value. But there's another hope behind it: the old protections from the Volkswagen Act and co-determination apply to the group as a whole.

Pull the brand out as its own company, and those protections lose much of their grip. The hard cuts then get decided by the new company. More independent of politics and the works council.

And because the works council and the state no longer have to approve the cuts directly, they can still back the restructuring. Only then can plants close and jobs go at scale.

And the restructuring has a 2nd effect. Remember Moritz Schularick's prediction: VW gets bought by a Chinese carmaker. A restructuring like this is what makes that possible in the first place. Because a company in pieces is a company you can buy.

And VW is showing right now that it's willing to sell: Everllence, Italdesign, MHP. Why not an entire brand at some point?

Which raises the question: will Volkswagen even exist in 5 years?

How This Can End for VW

Let's play it out: where can VW go from here? I see 3 scenarios:

Scenario 1: VW makes the comeback

VW uses the partnerships with Rivian and Xpeng to learn. It studies everything: the technology, how they work, the speed. With one goal: build these skills in-house and eventually get better than the partners.

That's the playbook China used to get big. First, they learned through joint ventures with Western companies. Then they tried it themselves. And in the end, they overtook the West technologically.

One thing is critical: the dependence on the partners can't become permanent. It has to stay a transition phase. And VW has to use it to stand on its own feet again.

Scenario 2: China buys VW

That's Moritz Schularick's scenario. A Chinese group takes over the VW brand completely. And it fits the moment: BYD wants to overtake Toyota by 2030 and become the world's largest carmaker. Buying VW would be the perfect shortcut: a global brand, the China business, South America, access to Europe.

But part of the package would instantly be worthless: the US business. A carmaker in Chinese hands has no future in the US. We saw that with Polestar.

And that's why there's a 3rd scenario.

Scenario 3: VW splits up

Nobody buys VW as a whole. Instead, the brand breaks apart along its 2 tech stacks:

• A China VW on Xpeng's technology: eventually owned by a Chinese group, running the China business

• A US VW on Rivian's technology: stays Western, takes over the US business, and maybe one day merges with Rivian completely

And the rest of the world? Either the 2 VWs split the markets between them. Or we get the absurd situation of the China VW competing against the US VW in the same market. That's what could happen in Europe.

Sounds crazy at first.

But VW built the fault line itself, with its 2 tech stacks. And the holding restructuring could be the first step in that direction.

My Take

Let's zoom out. From a German perspective, only Scenario 1 is worth rooting for. The other 2 mean losing Europe's largest car group.

And if you ask me: a complete takeover by China is unlikely. The US problem is too big for that. If VW doesn't make the comeback, a breakup is the more likely ending.

But let's hope it comes to neither.

Which leaves the question: how does VW make the comeback?

Start at the core. The car of the future needs completely different skills than the old one. Not mechanical engineers, but software developers and AI researchers.

Different skills also need a different organization. And that leaves VW with a brutal task: turning itself around 180 degrees. From an industrial manufacturer to a software company. It has to become a completely different group.

And this is where it gets uncomfortable. Some people can be retrained. But only up to a point. You can't turn every mechanical engineer into an AI researcher. And not everyone wants to change. Many just want to keep doing what they've always done.

What VW needs is a generational reset. At every level. That's one reason behind the 100,000 jobs.

Don't get me wrong. There are real people behind that number. But artificially keeping alive jobs that have no future helps no one in the end. It just kicks the problem down the road.

And here's the truly bitter part. Germany's own rules make exactly this rebuild nearly impossible.

Our employment protections. Our labor rights. They shielded German workers for decades. A real achievement, and one we Germans are rightly proud of.

But these rules were built for a stable world. And that world is gone. In a disruption, a company has to act more like a startup. Decide fast. Take risks. Try things.

That's what our rules barely allow.

What's left are expensive severance programs. And with those, the people who leave voluntarily are often exactly the ones you want to keep.

It gets worse. Hire someone in Germany, and you can't easily part ways again. For something completely new, that's too risky. So VW builds its new teams somewhere else from the start.

And that's my real fear. Our rules protect the jobs of yesterday. The jobs of tomorrow are being created in the US and in China.

The comfortable way out is familiar by now: buy someone else's technology and put your own logo on it. But that's not a future.

That leaves the hard way. Stay humble. Learn from the partners without getting played. Copy everything. And reinvent yourself along the way. Damn hard. But it's the only real chance.

In the end, VW's choice is pretty simple. Either VW reinvents itself. Or VW gets sold. In one piece, or in parts.

🔗 sz | mm | dw | hb1 | hb2 | hb3 | re | ek | ev1 | ev2 | cnn | ts | moia | pc

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Welcome to Issue #124 of The German Autopreneur.

This week I was on Markus Lanz, one of Germany's biggest prime-time talk shows. We covered a lot. One topic was the EU's 2035 combustion engine ban. Again.

So I want to step back and look at the whole picture.

It's the same debate Europe has been having for years. 2035 or 2040. Soften the rule or hold it. Ban combustion or keep the door open. And the longer I listen, the more certain I am: Europe is fighting about the wrong thing.

Today I'll cover 3 things:

• Why the 2035 date barely changes the outcome

• Why up to 80% of a car's value will soon sit in battery, software, and AI, exactly where Germany is behind

• Why German carmakers themselves are lobbying to soften the rule

Where the Debate Stands Right Now

The state of play:

• 2023: As part of the Green Deal, the EU agreed to ban the combustion engine. The rule says a new car in 2035 must emit on average 100% less CO2 than in 2021. In practice that means EVs only

• December 2025: The European Commission proposed cutting the target from 100% to 90% less CO2. Roughly 10% of new cars in 2035 could still be combustion. Credits for e-fuels, biofuels, and green steel make that possible

• Now: The debate is about softening the softening. After all the credits, a new car in 2035 would only have to emit about 73% less CO2 instead of the planned 100%

• Nothing is decided yet. The EU's environment committee votes this fall. Then the full EU parliament. Then negotiations with the member states

The Ban Has Nothing to Do With the Crisis

Here's what we know. The car industry is in a crisis right now. Especially in Germany.

In the debate it often sounds like the ban is the cause and scrapping it is the cure. That's the wrong analysis. It links 2 things that have nothing to do with each other.

The ban takes effect in 2035. That's 9 years away. The crisis is happening now. One can't have caused the other. And by the same logic, scrapping or softening the ban can't fix the crisis either.

The crisis has 2 causes. Neither has anything to do with the 2035 date:

1. The technology shift. An electric powertrain is simpler to build than a combustion one. Fewer parts, less labor, fewer jobs

2. New competition from China. German carmakers are losing market share to new rivals, mostly from China and the US. So they sell fewer cars

Neither softening nor scrapping the rule fixes those causes. The crisis has a different root. So a later ban is not the cure.

That doesn't mean softening is pointless. It can help the industry. Just not the way most people think.

Are EVs Even Coming?

First a reality check. Say Europe scraps the ban completely. Does that stop EVs? No. They win even without a ban.

For a long time EVs had real drawbacks in daily use. Mostly range and charging time. At first, mainly early adopters bought them and accepted those drawbacks.

Today those drawbacks are basically gone. The current state of the technology:

• Charging in 5 minutes

• 700 to 900 km of range

Even German models now charge in 10 minutes and reach 800 km.

That kills the practical argument against EVs. The competition shifts to price. And the mass car market always decides on price.

We just saw how fast that can happen. When the oil price jumped during the Iran crisis, demand for EVs rose sharply.

The mechanism behind it is simple. Picture two curves forming an X.

• Combustion gets more expensive. The technology is fully developed, so there's little left to gain. And fuel keeps getting more expensive over the years

• EVs get cheaper. The technology is still early and will get far more efficient. On top of that, huge economies of scale keep pushing prices down

Where the two curves cross, the market flips. And it flips fast.

In China it already happened. In 2025, more than half of all new cars there were electric or plug-in hybrids. One reason: on the total cost of ownership, an EV is already cheaper there than a combustion car. In Europe, price parity should arrive between 2026 and 2028, depending on the segment.

So the "if" is settled. Only the "when" is open.

The EU can influence how fast it happens here. But the market will flip anyway. And as an export industry, most of Germany's sales sit outside the EU in any case.

The Old Car vs the New Car

So the EV is coming. But there's one more thing to understand. An EV isn't just a car with an electric motor.

It's a new product category, invented mostly by Tesla. In China they call it the smart car. A computer on wheels.

You can see it in what makes up a car's value:

• Before: mechanics. Engine, transmission, chassis, sheet metal

• Now: battery, software, and AI

The battery alone already makes up 30% to 40% of a car's value. Add software and electronics. Their share rises to as much as 40% of the vehicle's value by 2030. Most of all, it's the AI that runs the car.

So battery, software, and AI together will soon make up as much as 80%. What classically defined a car is now only 20%. The mechanics become a commodity. And unfortunately, that's what Germany does best.

As the value shifts, so do the skills you need to build a car. And those are the skills Germany lacks.

So today there are 2 cars:

• The old car. The combustion car we know

• The new car. The software-defined EV, run by AI

On the old car, Germany leads. On technology too. On the new car, Germany is 1 to 2 product generations behind.

And that leads German carmakers to do something that looks backwards.

Why Carmakers Want to Delay the Ban

German carmakers sell in every major market in the world. And all of these markets are flipping from the old car to the new one. Just at different speeds.

If you want to hold your position everywhere, you have to do both everywhere. Build the old car and the new car at the same time. Run both tracks at once.

That's expensive.

On the new car, German carmakers are behind. So they have to do 2 things at once. Catch up, and keep the old business running. That double load eats into profits. It shows up every few months in the grim quarterly headlines.

So you'd expect carmakers to want this expensive phase to be as short as possible. They do the opposite. They want to sell combustion cars for longer. Why?

The reason is money. Catching up on battery, software, and AI costs enormous sums. And that money comes from the old business, where the margins still work. The profitable combustion car funds the future technology.

That's why they lobby in Brussels to scrap the ban.

The Dilemma for Policymakers

At first glance the answer seems obvious. If German industry is behind, and the old business funds the build-up of the new one, then policy should support exactly that.

Loosen the rules. Give the old business more time so carmakers can catch up globally. Sounds reasonable.

But there's a catch. The carmakers and the EU don't want the same thing:

• A carmaker wants to make a profit, anywhere

• The EU wants to keep high-value work and jobs at home

The problem is that this catching up doesn't happen in Europe. German carmakers build and buy their future technology mostly in China and the US. They're building their future there, not in the EU. So the high-value work and the jobs move abroad. And nothing guarantees they ever come back.

That flips an old arrangement. For decades, China was Germany's factory floor. Germany designed at home and let China build it. With the new car it's the other way around. Development now sits in China, not in Germany.

Volkswagen shows what this looks like in practice. There's no longer just 1 VW. There are 3:

• The old VW in Germany builds the old car, the one we know

• A VW in the US develops the new car for the West, together with Rivian

• And a VW in China develops the new car for China, and probably for emerging markets too, together with Xpeng

The future is taking shape in the US and in China. Europe keeps the old business.

So Germany earns its money with the car of yesterday and develops the car of tomorrow somewhere else.

The EU can help carmakers run the old business longer. But that also helps push the high-value work abroad. That's the dilemma the EU has maneuvered itself into.

The Real Mistake Is Industrial Policy

The reason the EU ends up in this dilemma at all goes back to a deeper flaw in its industrial policy. The idea of staying open to every technology.

I went out on my own in 2020. The painful lesson I learned as an entrepreneur: only focus leads to success. Try 10 things at once and you'll be good at none.

For a market, staying open to all technologies is good. For a single company with a clear strategy, less so. For a country's industrial base, it's the opposite of strategy.

Because as Europe, we can't compete with China and the US in every sector. We have to decide what to bet on, and then be better than the rest at exactly that. That's what industrial policy is. Deciding what a country builds its prosperity on.

Staying open to everything means not deciding. Jack of all trades, master of none.

And whoever doesn't decide ends up average everywhere. Average isn't enough against China and the US. Then you fall behind across the board.

The best argument for this is China itself. China didn't win the car market by staying open to every technology. The opposite. They were ruthlessly focused.

And with one goal. To take high-value work and jobs away from competing economies. From economies like ours.

And it worked. VW, Bosch, and others are moving their most valuable engineering jobs to China right now.

The One Time Europe Actually Committed

This is exactly what the EU tried with the Green Deal. It was never just climate policy. From the start it was also an industrial bet. Build a homegrown industry around green technologies. Batteries, electric powertrains, charging infrastructure.

China made the exact same bet. Just packaged differently, and a good decade earlier. As part of its five-year plans.

To build an industry like that, you first need a market trigger:

• The EU set the CO2 limit

• China used targeted subsidies

The effect is the same. Give the market a clear direction. The Chinese route uses subsidies instead of bans. That's easier to swallow, because it creates less resistance.

But after that first step, China took a second one. Because building an industry means 2 things:

1. Set the direction

2. Go in with real money, long before it pays off

The difference is in the second step:

• China set the goal and then built the road to it. Over 15 years it pumped more than $230 billion into the market, until it had a whole industry. Carmakers, suppliers, and real competition

• Europe set the goal and trusted the market to sort it out and build the road itself

The result: China built this green industry faster and bigger than Europe did. Now China is pushing into Europe's market with exactly that industry.

And it benefits from the rules Europe set for its own industry. So China threatens to choke that industry before it can even take off.

And Europe? Caught in the squeeze. Hold the target or loosen it? Protect its industry or its climate goals? Europe doesn't know either, and it reacts in contradictory ways:

• On one side it pays up to $6,500 in subsidies per EV

• On the other it softens the rule so that people buy fewer EVs

Europe hits the gas and the brake at the same time.

That's no way to build an industry. And that's exactly what staying open to every technology looks like.

My Take

What bothers me most about this debate: in Germany we turned a sober economic question into a culture war.

One side ties the combustion engine to the good old days and sees the EV as some left-green climate cult. The other side is firmly pro-EV. But they focus so narrowly on the environment that they miss the real point. China has overtaken Germany on technology.

And while both sides fight each other, someone else wins. That someone is China.

I take a deliberately neutral view, from the perspective of Germany as a place to do business. And from that angle, the real point is something completely different from the date.

The future of the car comes down to 3 things. Battery, software, and AI. Whoever doesn't master them will soon barely matter in this market. And that's exactly where Germany is behind.

Softening the ban can buy us time. But only if we use it to build exactly that. Otherwise bought time becomes lost time.

The exact date is secondary. Whether 2035 or a few years later, most markets will flip on their own by then anyway. On price, not on a ban.

What really worries me is the pattern behind it. German industrial policy is almost always reactive. We catch up on what others have already decided, instead of thinking ahead about what comes next.

You can see it in the battery. 15 years ago China started locking up the battery supply chain. Today it controls up to 90% of it. We're now paying a high price to break free of that dependence.

And while we do, the battery moment is repeating. This time it's about the AI that runs the car. The cards are being dealt right now. Nobody here has it on their radar yet. In the US and in China they do.

We're circling the engine ban date yet again.

What we should learn: the market won't sort this out anymore. Not against China and the US. There, policy decides, not the market.

We have to decide. What's our bet for the future? And then stick with it, even when it gets uncomfortable.

Today we manage the status quo. If we really want to save our car industry, we have to do the opposite. Build the future. And the future is battery, software, and AI.

🔗 ec | re | ea | iea | csis | cnbc

That’s all for today.

I’m Philipp. 10 years at Mercedes-Benz, independent since 2020. Now I cover the transformation of the auto industry from its epicenter: Germany.

P.S. If this was useful, forward it to one person in the industry who should read it. That's the kindest thing you could do for this newsletter. And a Restack helps more people find it.

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Welcome to Issue #123 of The German Autopreneur.

“China is faster.” Nobody wants to hear that sentence anymore.

Dirk Slama doesn’t either. And he would know. He’s a VP at Bosch and the head of the industry initiative digital.auto. He’s spent years working on exactly this problem.

And the sentence is still true. Unfortunately. So the real question isn’t whether China is faster. It’s why.

The usual answer: Germans just can’t do software. Dirk’s take: “That’s too easy.” The problem isn’t what German carmakers build. It’s how they build it.

Here’s what I’ll cover today:

• How a modern car gets built, and why that turns into a problem

• What this problem costs in time and money

• And the idea Dirk wants to fix it with

How a Modern Car Gets Built

A traditional carmaker is basically an integrator. It designs the car, and hundreds of suppliers build it. Bosch delivers the injection system, Continental the brakes, ZF the transmission. Each one builds its part. The carmaker’s real job is to plug it all together at the end.

That worked well for decades. Especially while a car was mostly mechanical. A brake was a brake. You installed it and it worked. Every part was self-contained.

Today almost everything in a car is connected and runs on software. The powertrain, the brakes, charging, driver assistance like automatic emergency braking, even the seat. Each of these parts has its own small computer with its own software. They’re called electronic control units, or ECUs. A modern car has more than 100 of them.

And these ECUs don’t work on their own. They talk to each other constantly. A single function in the car almost never sits in just one ECU. It runs across many, often from different suppliers.

So all those separate parts have turned into one tightly connected system. And German carmakers plug that whole system together and test it only at the very end.

Why That Becomes a Problem

First, the basics. There are roughly 2 ways to build a complex product:

1. The iterative way comes from software. You build a rough version fast, try it out, find problems early, and improve in small loops. Step by step, you work your way to a finished product

2. The sequential way is the classic way to develop a car. First you plan everything in detail. Then you build. And only at the very end do you assemble and test

That sequential approach is exactly how the auto industry works. It has a name: the V-model.

Picture a big V. To develop a vehicle, you walk through this V once. Down the left side first, then back up the right:

• You start at the top left. There’s no car yet. It exists only as an idea: what should the car do?

• From there you work down the left side and get more concrete. The idea becomes big systems like the powertrain, the brakes, and infotainment. Those systems become individual parts. For each part, you write down exactly what it has to do. Precise enough for a supplier to build it later

• At the bottom point of the V, the building happens. Each supplier makes its part

• Then you move up the right side. Now things get assembled and tested. First the single part. Then the parts get combined into bigger systems

• And at the very end, all the systems come together into the complete car

Here’s the catch. Whether it all actually fits together only becomes clear here, at the top right. At the very end.

In classic vehicle development, you walk through this V once. Not in loops.

Now back to that tightly connected system of ECUs. That’s exactly where it becomes a problem. A single function doesn’t sit in one ECU. It runs across many, and across several suppliers.

Dirk gives an example of such a function: the welcome sequence. Every modern car has one today. You get in, and the car adjusts to you. The seat moves into your position. The headrest adjusts. The display starts up. It looks like a single function. In reality, multiple ECUs from dozens of suppliers mesh together to make it work. And a modern car has hundreds of functions like this.

The more of these functions interlock, the more can go wrong when you plug them together.

An interface is missing. One ECU behaves differently than expected. A function works on its own, but not in the whole car. That often surfaces only shortly before production starts.

Dirk puts it this way: “The problem is that we integrate too late, we see dependencies too late, and we test the full system far too late.”

Then the big repair job begins. About 6 months before production starts, the head of development pulls everyone together, often twice a day. “Preferably on the factory floor, nobody gets to sit,” Dirk says. “And then everyone gets blamed, one after another,” because their part doesn’t fit cleanly.

He has a name for it: integration hell. And it doesn’t happen now and then. “It’s not the exception. It’s the rule.”

What This Costs

German carmakers find problems late and have to fix them at high cost. That eats time and money.

From idea to start of production, German carmakers take 48 to 54 months on average. Chinese competitors do it in 24 to 30. Those numbers come from a Bain analysis covering 2020 to 2024. Since then the gap has only grown. Some Chinese carmakers now bring a new model to market on an existing platform in as little as 9 to 12 months.

And they do it cheaper. For a new model, they spend around 27% of what a German carmaker spends. For the development budget of one German car, they bring almost 4 cars to market. On top of that: while German models often sit nearly unchanged for years, Chinese carmakers keep launching the next version.

No country spends as much per car as Germany.

Why? Mostly the way they work. Tesla and many Chinese carmakers build their cars more like software. Exactly the first way we saw earlier. They don’t wait until the end. They plug the parts together from the start and find problems early. The big repair job at the end almost disappears.

That’s not the only reason, of course. But it’s one of the biggest.

A Wireframe for the Car

This early integration is exactly what Dirk wants to open up to everyone.

His initiative digital.auto has a concept for it called SDV Forge. The idea sounds simple at first. You have to pull integration forward. To the start instead of the end. On the V-model, from right to left. Developers call this shift-left. Dirk says: “Shift-left simply means that things which used to happen late now happen early.”

But how do you test whether the parts fit together when the car doesn’t exist yet?

I spent years working on the Mercedes configurator, the online tool you use to build your own car. That was basically web design. And we never started coding right away. We started with a wireframe.

A wireframe is a rough skeleton of boxes and arrows. Picture the floor plan of a house that hasn’t been built yet. You slide the rooms around and see right away whether the path from the kitchen to the dining room works. With our product it was the same. We saw how the whole thing worked together long before a single line of code was written. Step by step, the skeleton turned into a real prototype.

SDV Forge now applies this principle to the car. It builds a wireframe of the whole car. A rough model on the computer that you can already try out.

Here’s how the model gets built. Not by hand. From documents every carmaker already writes anyway. At the very start, everyone records what the car should do: requirements, function descriptions, interfaces. Until now, those documents sat scattered across thousands of files.

Now you hand those documents to an AI, and it builds the model of the car. Each team can test its part and see right away whether it fits with the rest. Where something doesn’t fit, they fix it on the spot.

The missing interface between the seat and the headrest no longer surfaces just before production. It shows up on the model, right at the start. While the problem is still small and cheap.

My Take

The question isn’t whether Germany is too slow. It’s whether German carmakers are ready to work differently.

Because the real issue is bigger than a tool. German carmakers build a different product today than they used to. The car used to be a machine made of sheet metal. A mechanical masterpiece, perfected over more than 100 years. Today software mostly decides what a car can do. And a different product calls for a different way of building it.

But decades shaped these organizations around the old product. German carmakers got incredibly good at building the car they know. Again and again. And better every time. That way of working sits deep in their DNA. It was the recipe for success for a long time. And it’s exactly what makes the shift so hard today.

So the biggest job is the organization behind it. The shift from a classic industrial corporation to a software-first company. It means rethinking the product. And the organization that builds it.

This is exactly where Dirk’s initiative comes in. It’s more than a concept. You’re not just bringing in a tool. You’re bringing in a new way of thinking. Test early. Fail early. Learn before everything is set in stone.

That sounds easy. It isn’t. It’s exactly what the big carmakers have struggled with for more than 10 years. Failing early doesn’t fit an organization built to never make a mistake.

Still, let’s be honest. SDV Forge today is still just a concept with an early rollout among partners. So far there’s no finished car built this way.

And the best concept changes nothing as long as the organization behind it stays the same. The hardest work is the shift in mindset. Showing something unfinished early, instead of hiding it until it’s perfect.

Because in the end this is about much more than development speed. It’s about who rebuilds their organization so it can build the car of the future at all. That decides which of today’s big carmakers will still exist in 20 years. And which won’t.

Even better that someone here in Germany is finally building a solution, instead of just analyzing the problem. Dirk’s initiative is independent and open to the whole industry. There should be more of that.

🔗 digital.auto | Bain

That’s all for today.

Until next week,

Philipp

PS: If you find value here, share it with someone who should read it too.

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Welcome to Issue #122 of The German Autopreneur.

Look at Germany, and the picture seems clear. Plants are closing, jobs are disappearing, and the mood is at rock bottom.

Then look at the global numbers. In 2025, the world sold around 90 million cars, almost as many as in the best years before Covid. By 2030, it should pass 100 million a year for the first time.

How does that fit together?

So it’s worth looking beyond Germany, at the whole world market. That’s what today is about:

• Why India now builds more cars than Germany

• Why 1 in 4 new cars is already electric

• Who controls tomorrow’s market

The World Buys Around 90 Million Cars a Year

After the Covid crash of 2020, the world market has fully recovered. In 2025 it reached around 90 million cars sold (passenger cars and light commercial vehicles), almost back to pre-Covid levels. And the forecasts keep pointing up, toward 100 million.

A global car crisis looks different. The pie is getting bigger. It just isn’t getting bigger everywhere. Almost all of the growth happens outside Europe and North America.

For Germany, that’s exactly the problem. German carmakers make their money in the world’s growth markets.

So where is that growth?

The 4 Big Auto Regions Are Drifting Apart

The industry splits the world market into 4 big regions. New car sales in 2025 at a glance:

• China: 26.6 million. The largest single market in the world. After 2 decades of boom, it’s now heading for a plateau

• North America (US, Canada, Mexico): 19.6 million. Barely any growth left, but stable at a high level

• Europe: around 15 million. Selling about the same for years

• Rest of World, meaning everything outside these 3 regions: around 28 million combined. As a block, even a bit bigger than China, and bigger than Europe and North America on their own. And the fastest-growing region of all

Rest of World sounds like an afterthought. That’s where the name comes from. On their own, these markets were long too small. They didn’t show up next to China, Europe, and North America.

It mainly includes (2025 sales):

• India: 4.5 million, now the third-largest single market in the world

• Japan: 3.8 million, the exception here. A mature market with barely any growth, where buyers mostly pick hybrids

• Brazil: around 2.5 million

• Plus Southeast Asia, the Middle East, Latin America, and Africa

Completely different markets. But this is exactly where the growth will come from in the coming years.

For context, Germany sold around 2.8 million cars in 2025.

So much for where cars are bought. Who builds them is just as interesting. And who sells them to the world.

China Exports Almost 2x as Many Cars as Germany Builds

Where are the most cars built? The top 5 in production in 2025:

1. China: 34.5 million, 1 in every 3 cars in the world

2. US: around 10.2 million

3. Japan: around 8.4 million

4. India: 6.5 million

5. South Korea and Germany: around 4.1 million each

China has been number 1 since 2009. India has clearly overtaken Germany.

How much of that production goes abroad? The 3 biggest car exporters in 2025:

1. China: around 7.1 million (a record)

2. Japan: around 4.2 million

3. Germany: 3.2 million

For decades, Germany was THE export champion. In 2022, China first overtook Germany, then Japan in 2023. Since then, China has been number 1. And today China exports almost 2x as many cars as Germany even builds.

But that’s only the view by volume. By value, the ranking looks different. German passenger-car exports brought in around $170 billion in 2025, more than any other country. China ships more than twice as many cars but brings in an estimated $120 billion. So there are 2 export champions. China by volume, Germany by value.

But why does China export so much in the first place? Because its factories can build far more than its own market absorbs.

• Capacity: an estimated 45 million cars a year

• Sales at home: around 27 million

This overcapacity pushes Chinese cars onto the world markets. Especially the growing ones. And these exports are getting more electric. In April 2026, more than half of them were EVs for the first time.

1 in 4 New Cars Is Electric

In 2020, 1 in 20 new cars worldwide was electric. In 2025, it’s 1 in 4. And the world’s biggest EV maker is no longer Tesla. It’s BYD (2.26 vs 1.64 million pure EVs sold).

The combustion engine is past its peak. In 2017, the world sold around 86 million pure combustion cars. In 2024, around 60 million. Down 30% in 7 years.

But every market switches at its own pace. The share of EVs and plug-in hybrids in new cars in 2025:

• Norway: around 96%

• China: around 54%

• Europe: around 27%

• Global: around 25%

• US: around 9%, and falling since the purchase subsidy ended in 2025

• Rest of World: still in the single digits, but +48% growth in 2025, faster than any other region

The driver is almost always the same. Imports from China.

4 Numbers Worth Keeping in Mind

• Almost 1 in 2 new cars worldwide is an SUV. In Europe it’s 54%

• Europe’s most popular powertrain is the hybrid without a plug, at 34.5%. Diesel comes last among the major powertrains, at 8.9%

• New cars are at record prices almost everywhere. In the US and Germany, around $49,000 on average. Only in China are they falling. A new car there costs around $23,500 on average, roughly half

• Hydrogen stays a niche. In 2025, more than 20 million EVs sold against around 16,000 hydrogen cars. 1,000 to 1

But who actually sells all these cars?

Who Controls the World Market

So far this was about markets, production, and powertrains. Now it’s about who sells them. Here, each carmaker counts under its home country, no matter where in the world it sells.

For more than 20 years, Japan was number 1 in this count. In 2025, that’s over. China has overtaken Japan.

The world market ranking for 2025, measured by share of all vehicles sold worldwide:

1. China: around 28% world share (27 million vehicles), rising fast

2. Japan: around 26% (25 million), stagnant

3. Germany: around 14% (13 million), slightly falling

4. US: around 12% (12 million), stable

5. Korea: around 7% (just over 7 million), stable

It happened fast. In 2022, China was still 8 million vehicles behind Japan. And the forecast: by 2030, 1 in every 3 cars sold worldwide will come from a Chinese brand.

The biggest single group is still Toyota. It’s the only one that sells more than 10 million cars a year.

And Germany? That always means 3 groups. VW, BMW, and Mercedes, with all their brands from Audi to Porsche. Together they hold around 14% of the world market. Put differently, about 1 in 7 cars sold worldwide comes from a German group. For EVs and plug-in hybrids, it’s still 1 in 9.

Here’s the German market share by region:

• Europe: around 36%, the strongest region

• China: around 16%, a few years ago it was still over 20%. And still falling

• US: around 8%, stable at a small level

• Rest of World: under 10%, with big differences by market

So the old growth engine stalls. In 2025, VW, BMW, and Mercedes all lost share in China. Mercedes and BMW even by double digits. And 2026 doesn’t look any better so far.

My Take

The German auto industry lives off exports. The model was always the same. Develop in Germany, sell worldwide. Especially where the market is growing.

For 20 years, that growth market was China. That’s over now. In 2025 it did grow strongly once more, driven mostly by government purchase incentives. But the boom is done. In the coming years, the market heads for a plateau. And what growth is left, Chinese brands increasingly take for themselves.

For German carmakers, that means one thing. Their business in China will get smaller in the coming years, not bigger.

That makes Europe as a home market even more important. But Europe hasn’t grown for years. At the same time, Chinese brands are attacking here. Their share of the entire European car market has almost doubled in just one year, from around 4% to over 7%. By April 2026, almost 10%.

In a market without growth, that only happens at the expense of the established players. In plain terms, German carmakers will likely sell less in Europe too, not more.

Then the US. This market isn’t growing either. For German carmakers, it’s a stable but small premium niche. And US tariffs make the business even harder. Don’t expect big jumps here.

In none of these 3 regions will German carmakers grow in the coming years. That leaves just one growth region. Rest of World. Almost all the growth in the coming years comes from these markets. That’s where carmakers will win the customers of the next 20 years.

Chinese carmakers have figured this out. They are expanding into exactly these markets. The market share of Chinese brands there:

• Southeast Asia: in the big markets, up from around 6% to over 10% in a single year

• Middle East and Africa: from 10% to more than a third by 2030

• Brazil and Thailand: recently around 85% of all EVs sold

And they change these markets in the process. Where Chinese brands move in, the market tips from combustion to electric much faster. So the same fight repeats there. First China, then Europe, now these markets. German carmakers can compete on combustion engines. On EVs, they struggle to keep up with China.

Still, there’s no way around these markets. Only there can German carmakers offset the coming losses from China and Europe. So the focus has to move to where the growth is.

But there’s a catch. Rest of World isn’t one market. It’s dozens. India isn’t Brazil. Thailand isn’t Saudi Arabia. There’s no single strategy for all of them. Whoever wants to win these markets needs a separate answer for each one.

So the growth isn’t gone. It’s just somewhere else. The next decade of the car industry won’t be decided in China or Europe. It’ll be decided in the rest of the world.

And the best part: this race has only just begun.

🔗 sp | oica | dst | cnp | acea | iea1 | iea2 | f2m | alix | nik

That’s all for today.

Until next week,

Philipp

PS: If you find value here, share it with someone who should read it too.

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This issue is supported by Berylls by AlixPartners

For this issue, I spoke to Jürgen Simon. He co-authored the new TOP-100 supplier study from Berylls by AlixPartners. His analysis and the study’s data run throughout.

👉 See the full TOP-100 data

Berylls by AlixPartners had no editorial influence over this issue.

Welcome to Issue #121 of The German Autopreneur.

In 2025, the world built more cars than the year before. And yet the combined revenue of the world’s 100 largest suppliers fell. More cars, less money.

Germany is hit the hardest. 17 German companies rank in the top 100. That puts Germany 2nd by revenue. And yet German suppliers have the thinnest margins of any major supplier nation.

They still sell a lot. More than almost anyone. They just don’t make money anymore. And if they don’t rebuild their businesses now, they won’t be around much longer.

I looked at the new TOP-100 supplier study from Berylls by AlixPartners and spoke to Jürgen Simon. He’s one of its authors.

In this issue:

• Why suppliers now earn more than the manufacturers they supply, for the first time in years

• Why German suppliers are down to 1.7% margins

• What Japan and China do differently. And how Germany can find its way out

Suppliers Now Earn More Than Manufacturers

That sounds backwards. For the first time in years, the average supplier earns more than the manufacturer it supplies:

• Suppliers: 5.2% margin (down from 5.8%)

• Manufacturers: 4.2% (down from 6.9%)

2 very different stories drive those numbers.

1) Manufacturers are having an especially hard time. There’s intense global price competition. Add geopolitical tensions and tariffs. And on top of that, they still have to invest billions in future technologies.

2) Not all suppliers are the same. “Supplier” is just a catchall (from chipmakers to seat manufacturers). A few are doing very well and pulling the average up. Others barely earn anything.

What separates winners from losers? Not who sells the most. 3 things matter most:

• What you build

• Where you build it

• Who you sell to

And on all 3 counts, German suppliers are in a weak position:

• Many build what’s earning the least right now

• They often produce where it’s expensive

• Their most important customers are German automakers, and those are struggling the most

The result: the typical German supplier (median) is left with 1.7% margin.

The Segment Decides Everything

Just how big is the gap? Look at the typical margin by segment:

• Strong: semiconductors 24.6%, glass 23.2%, tires 10.2%

• Weak: powertrain 4.5%, batteries -11.3%

Some segments make serious money. One is actually burning cash. And of all things, it’s batteries. The segment everyone considers the future.

The interesting detail: no segment has grown faster in revenue than batteries. They’re up +27.9% per year since 2020. And no segment has worse margins.

How is that possible when more EVs sell every year?

Building batteries means putting billions into massive factories upfront. Those factories aren’t running at full capacity. EV demand grew more slowly in 2025 than planned.

On top of that, falling cell prices are squeezing margins. Companies sell more and still make almost nothing. Jürgen summed it up: sectors like batteries and electronics sold very well. But that doesn’t automatically mean profit.

South Korea shows what that looks like. They’re stuck at 2.9% margin because the major battery manufacturers are deep in the red.

China is different. Market leaders like CATL don’t publish margins, but are seen as clearly profitable.

The lesson: the wrong segment drags down an entire nation’s average.

German Suppliers Barely Make Money Anymore

It shows up most clearly in Germany:

• 2nd in revenue

• Last in margins

That’s the worst result of any major supplier nation.

You can see it with Bosch. Around $60 billion in revenue. By far the world’s largest auto supplier. And the margin: 1.8%.

The main reason is the segment. Germany’s biggest suppliers are heavily tied to traditional powertrain. That’s everything around the combustion engine. And that segment is weakening. 5 of the 10 lowest-margin companies in the top 100 are German.

2 German companies side by side show why the segment matters so much:

• ZF in traditional powertrain: -2.8% margin

• Infineon in semiconductors: 21.5%

Location is the other factor. Producer prices in Germany rise around 6.7% per year. In China: 0.8%.

What that looks like in practice: in 2025, 10 factories closed in Germany and just 1 opened. Germany is the only major region where more plants are closing than opening.

The thin margins are becoming a real problem for many. To get through it, these companies need to rebuild their businesses. That costs a fortune. It can’t come from the business itself. They don’t earn enough. The only option: take on debt.

But when you barely make money and are already heavily indebted, banks aren’t offering much:

• Either no credit at all

• Or only at very high interest rates

At exactly the moment they need money most, it’s at its most expensive.

Berylls by AlixPartners expects a wave of bankruptcies and mergers through 2027/28.

Japan Earns 3x What Germany Does

The comparison with Japan is striking. Japan is actually very similar to Germany: an old, strong combustion-engine nation with well-established manufacturers and suppliers. Japan has 21 suppliers in the top 100. Germany has 17.

And yet the typical Japanese supplier earns 5.9% margin. More than 3 times what a German supplier earns.

How is that possible, with such similar starting conditions?

It’s not about the product. It’s about the relationship between manufacturer and supplier.

In Japan, manufacturers and suppliers work together. The relationships are close and built on mutual respect. Companies often hold stakes in each other.

The manufacturer doesn’t just squeeze prices. Both sides get through the rough years together.

In Germany, it’s the opposite: take it or leave it. If you supply Mercedes, VW, or BMW, you’re just a cost to cut. Pressure gets passed straight down the chain. I hear this from suppliers constantly.

And that’s dangerous. We in Germany are destroying our own supplier base piece by piece. Germany needs these suppliers for development and production. And we’re the ones pushing them out of the market.

Same starting conditions. Completely different relationship with the customer. That 3x gap is entirely self-inflicted.

China Earns the Most and Grows the Fastest

And China? You’d expect brutal price competition, nobody making money. It’s the opposite:

• 15 companies in the top 100, 3 of them new this year

• +11.0% revenue growth for the typical company

• 9.6% margin (median), roughly 5 times what Germany earns

One caveat: only 7 of the 15 Chinese companies actually report their margins. Major players like CATL aren’t included here.

But the speed is what’s really unsettling. China is growing fastest:

• 8 of the 10 fastest-growing suppliers in the world are Chinese

• By revenue, China has just overtaken the US and now sits at 3rd place, right behind Germany and Japan

Until now, China’s growth has come mainly at Japan’s expense. Since 2020, Japan has lost 6 spots in the top 100. China has gained 8. Germany has held its 17.

The question is how long that lasts. Jürgen’s assessment: holding on to those 17 spots will be “very difficult.”

How German Suppliers Can Still Survive

For German suppliers, it’s no longer just the margin under pressure. It’s the business model itself. From 3 directions at once:

1. Their core business is shrinking. Everything around the combustion engine is in decline

2. Chinese suppliers are taking market share. Even German manufacturers are increasingly buying from China

3. Chinese automakers are becoming more important as customers. But they’re more vertically integrated and buy less from outside. And when they do, they prefer Chinese suppliers

Getting cheaper or better isn’t enough anymore. Jürgen’s words: “The old German premium supplier model has to change, at least in part.”

So there are 2 directions:

1. Expand into more profitable segments

2. Or exit automotive entirely and move into new markets

What the restructuring looks like in practice:

• ZF is selling its entire driver assistance division to Harman for around $1.6 billion. That cuts its debt

• Continental is spinning off its entire automotive business as Aumovio

• Mahle is building cooling modules for stationary battery storage systems

• Schaeffler is making components for humanoid robots and cooling technology for data centers

The AI boom is both a threat and an opportunity. Data centers are buying up the chips the automotive industry needs. But that same wave creates an opening: suppliers who build components for those data centers benefit disproportionately.

My Take

For me, this won’t be decided by the numbers. It’ll be decided in people’s heads.

German suppliers had a stable business for decades. Same customers, same market. Our industry is cyclical: you move from one crisis to the next. But until now, each was temporary. You got through it by becoming more efficient and cheaper. Then things picked back up. The business model itself was never in question.

This crisis is different. Getting more efficient isn’t enough this time. For the first time in generations, these companies have to rethink what they actually do.

And they can. Bosch, Continental, ZF. Some have been around for over 100 years. They all started with a bet: someone took a risk and saw a market that didn’t exist yet. The quiet decades came after. The job changed: optimize, manage.

That’s exactly where they need to go back. From manager to founder. The hard part isn’t figuring out which segment is performing. The hard part is this shift in mindset. Getting curious again. Being brave again. Making bets again. And most of all: learning how to learn again. What do I bet on? What do I let go of? Where do I want to be in 10 years?

Jürgen put it bluntly: “The core isn’t necessarily what I’ve been doing for the last 100 years.” This is “far from a temporary dip.” It’s “more like a new reality.”

Realistically, that means: in a few years, maybe fewer than 17 German companies will still sit in the top 100. That doesn’t have to be bad news. Some might be missing simply because they found a far more profitable business outside automotive. And the ones that remain will be making money again. Not because they were the biggest. But because they made the right bet at the right time.

🔗 Berylls by AlixPartners TOP 100 Supplier Study 2026

A note on methodology: Margins by nation reflect the typical company (median), not the average. Individual figures may therefore differ from the study’s published numbers.

That’s all for today.

Until next week,

Philipp

PS: If you find value here, share it with someone who should read it too.

Want to work with me?

I help global B2B companies connect with 100,000+ automotive decision makers in Germany.

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Welcome to Issue #120 of The German Autopreneur.

By 2035, 1 in 4 jobs in Germany’s car industry will be gone.

The VDA (Germany’s auto industry association) says 100,000 have already disappeared since 2019. Another 125,000 are set to follow.

And it’s not just the car sector. Across German industry, more than 10,000 jobs have disappeared every month for the past 2 years.

Audi CEO Gernot Döllner put it bluntly to his own people:

“This is no longer about a single model or market share here and there. It’s about the survival of the German auto industry.”

That’s a lot at once. And it sounds like the end.

Still, every week I get messages like this: why don’t you write something positive about the German car industry for once? Usually with a link to some shiny new model. I get it.

But here’s how I see it. Plenty of outlets celebrate those wins already. My job is to zoom out.

To ask where the industry is heading as a whole. To connect the scattered headlines into one picture. And to give decision-makers the signals that matter.

And when I zoom out, it doesn’t look good.

Germany’s time as a car nation is over.

Today we’ll look at:

• Why Germany’s car business model is broken

• Why the fight against China is a fight between systems, one we can’t win the way we’re playing it

• Why we showed up late to 3 car technologies

• And how we get out of this

Why Germany’s Car Business Model Is Broken

The “Made in Germany” success model always stood on 4 pillars:

1. Complexity. A combustion engine is one of the most complicated mechanical devices ever built. Thousands of parts, tolerances down to the micrometer. We did this better than anyone. That was our moat

2. An industrial ecosystem. Carmakers, suppliers, and research institutes next door to each other. Stuttgart, Munich, Wolfsburg, Ingolstadt. Entire cities built around the car, with hundreds of players packed close together, pushing each other to peak performance

3. Cheap energy from Russia

4. Profits from China. Our biggest growth market since the 1990s. We developed in Germany and sold in China. More every year. For decades the money just came in. Cash was never the problem

From these 4 pillars came a story that worked worldwide. A German car stands for quality and high tech. That’s why Mercedes, BMW, and Audi could charge a premium everywhere. More expensive, but better. That was the story.

Today all 4 pillars are crumbling at once:

• The combustion engine matters less and less

• The ecosystem is moving abroad

• The Russian gas is gone

• And China is buying fewer and fewer German cars

Volkswagen, Mercedes, and BMW now sell nearly a third fewer cars in China than in 2018. And that’s even though the overall market grew by about 25% in the same period. The market is booming, just without us. The money machine has stopped.

And the “Germany equals high tech” story doesn’t hold anymore. Because German cars no longer lead where high tech gets defined today. In the electric powertrain. In software. In AI.

And most of it leads back to China. So that’s where we look next.

Why the Fight Against China Is a Fight Between Systems

China built its own car industry in just a few years. One that has already overtaken us. For a long time, nobody in Germany took it seriously.

They did it by leapfrogging. They skipped an entire stage of development.

China realized early that it would never catch us in the traditional car market. We spent 100 years perfecting the combustion engine. No one gets close to that.

So the Chinese skipped the combustion engine. And asked themselves what comes next.

The electric, software-defined car.

They didn’t invent it. They copied it from Tesla.

They just understood earlier that this was where the future lay. And whoever controls the world’s biggest car market gets to shape that future.

This is even built into China’s industrial policy: first adopt, then understand, then do it better yourself. That’s how it went with high-speed trains, with solar, with AI. And now with the car.

And all of it was possible for one reason. China competes as an entire system.

Picture 2 soccer teams.

One has a coach. He sets the tactics, picks the lineup, and subs out anyone who doesn’t deliver. All 11 play toward the same goal.

The other has no coach. 11 individual players on the field. Each with their own strategy. And each one wants to score for himself.

That’s China versus us. A collective against individual players.

What does that mean? Here every company fights for itself. Each one runs its own strategy.

China works differently. There, an entire economy pulls toward one goal. Hundreds of companies, 1.4 billion people.

And above all those individual strategies sits a government master plan. A national industrial strategy that sets the direction.

The companies still compete with each other, of course. They’re meant to. But in the end they all pull in the same direction.

And it’s planned from the start that most of them will go under. That’s exactly the point. The goal is to produce global champions.

Here’s how the Chinese playbook runs in 5 steps:

1. The state sets the stage. Capital, subsidies, market access, talent, infrastructure

2. Hundreds of startups jump in. A whole ecosystem forms

3. Oversupply is allowed on purpose. More supply than demand

4. Whoever isn’t efficient and innovative dies. Brutal competition does the rest

5. The survivors are unbeatable. That’s how BYD and CATL were born. Today the biggest EV maker and the biggest battery maker in the world

VW CEO Oliver Blume said recently: “Our business model doesn’t work anymore. Not at Volkswagen. Not for Germany as a whole.”

He means more than a business model. He means a whole system that belongs to another era. Our system. Everyone fights for himself. Against an opponent that competes as a collective. With plans that run for decades.

And it gets worse. Because the car itself is becoming something entirely new.

Software Is Eating the Car

In 2011, tech investor Marc Andreessen wrote a line that became the most important thesis of the decade: “Software is eating the world.”

In Germany, that line never really clicked for us. We only understood what it meant once it had already happened:

• 2007, the phone. Nokia was the world leader. Then came the iPhone. Today Nokia doesn’t build phones anymore

• 2015, music. Once the CD on the shelf. Then came Spotify. Today nobody owns music

• 2020, banking. Once the branch with a counter and an advisor. Then came banking apps like N26 and Revolut. Today the bank is an app

Same pattern every time. An industry, stable for decades. Then software comes in and rewrites the rules. And the old leaders disappear.

And that’s exactly what’s happening to the car now. Except here the wave didn’t come once, but 3 times. First the powertrain went electric. Then the car became software. Now AI takes the wheel. Each wave built on the one before. And each came faster. We were late to every one. The third is rolling right now.

The car today is no longer the car we knew. It’s a computer on wheels. A robot that drives itself. The heart is a software platform. Everything runs on it: driving, assistance, AI. The metal around it becomes an afterthought.

That’s why the new generation of carmakers builds completely differently. Software first, then the car. They think like a tech company, not a carmaker.

And this is exactly where it gets dangerous for us. When the product changes this fundamentally, you need a completely different organization to build it. A different culture. Different processes. Different people. You have to turn your entire company inside out.

Almost no one manages it. German carmakers have been trying to pull off this exact rebuild for over 10 years. And still haven’t cracked it.

But why is that?

These companies were trained for over 100 years on a single task. Squeezing more and more out of a mature technology. 3% cost out, 5% efficiency in.

The system rewarded the optimizers and weeded out the inventors. For decades that was exactly right.

Today the game has changed. Now what counts is inventing something brand new. And that’s exactly what’s catching up with them. Perfecting something that exists and inventing something new are a whole different ballgame. A single company can almost never do both.

Volkswagen tried it with its software unit CARIAD. 6,000 developers, over $13 billion. In the end, the old organization smothered the new one.

And I want to make one thing clear. Inside these companies are plenty of people who want to break it open. They’re just fighting a system that doesn’t want to change. The problem isn’t the people. It’s the machinery they’re stuck in.

That’s the one reason German carmakers can’t move forward at home.

There’s a second. The most uncomfortable one.

The German customer doesn’t even want the car of the future. He wants a solid car, the way he knows it. He doesn’t need all the digital extras.

With the combustion engine it was different. Germany was the test lab. German carmakers could develop here and test the newest technology directly with customers. What worked here was then sold to the whole world. That was our success model.

Today that doesn’t work anymore. Nobody here wants the car of tomorrow. In China they do.

Together, those two forces push German carmakers out of the country. At home they lack the organization that can build the new car. And the market that wants it. So they go where both exist.

That’s why VW and supplier Bosch are moving their development to China. And why Mercedes CEO Ola Källenius says: “I am Chinese.”

And sadly it’s not the factories that are leaving. It’s the R&D. The know-how. The most valuable thing we have. They’re now developing the car of the future 8,000 kilometers away. The car nobody wants here.

It comes down to one thing. These companies have to reinvent themselves. As software firms. And in history that has almost never worked. Nokia, music, the banks. When the software wave hits an industry, the newcomers always win in the end. Not the old market leaders.

German carmakers want to be the exception. But inside the old structures that’s barely possible. So they look for a place where they can start from scratch again. Far from the old machine. With new people who don’t have the old thinking baked in.

My Take

I’m not saying this as an outsider. I’ve been in this industry since 2011. My livelihood depends on it. If it goes down, it hits me too.

Before we look ahead, we still have to be honest with ourselves. In the car industry, we no longer set the pace. We’re running behind. For Germany, the car business probably won’t ever be what it once was. Too much has happened.

The car was never just a product for us. It was always part of our identity too. Tell someone abroad you’re from Germany. Almost always the same thing comes back: soccer, beer, and cars. That’s exactly why it hurts when this slips away. And that’s exactly why I do this. Because it’s not only about cars. It’s about us.

The end of the car is not the end of Germany.

So the question isn’t how we get the car back. It’s how we secure our prosperity when the car no longer carries it.

And that’s exactly where our problem lies. When an industry stumbles here, everything revolves around preserving it. The tax money, the lobbying, the whole debate. Everything goes into keeping the old alive. Almost nothing into building the new.

This time we should do it differently.

1) Protect your own market

We’re always told politics should stay out and the market will sort itself out. Open borders, fair competition, may the best one win. That made us rich. But today that belief is mostly one thing. Naive.

Because the free market doesn’t work against an opponent that plays as a system and doesn’t follow the rules. You only beat a system as a system. That includes shielding your own market. Uncomfortable. But it’s exactly what China and the US do too.

But a wall only protects whoever builds something behind it. This isn’t about closing ourselves off. It’s about a deal. Whoever wants to sell here should also leave something behind. Produce here, share technology, create good jobs. Market access for real value. That’s exactly what China demanded from us for years.

Former ECB chief Mario Draghi described this in his 2024 EU competitiveness report. Europe has to stop playing nice. Everyone else plays industrial policy hard. Europe has to act as one player and work on a strategy for years. When we say “together,” we usually mean just 27 EU foreign ministers trying to speak with one voice. That’s not enough. We need industry and politics working on the same plan for decades. Airbus proved it can be done. Several countries joined forces and invested billions together. Today Airbus and Boeing split the global market between them.

2) Build the new

That was the defense. But it won’t secure our prosperity. Because in the future, prosperity won’t come from the car anymore. It’ll come from industries that don’t even exist yet.

And here China is worth a look. They were once exactly where we stand today. Left behind, with no chance of ever closing the gap. Their answer was to leapfrog. Don’t fight where the game is already decided. Step in where it’s just beginning. Get ahead of the wave. That’s exactly what we have to do now.

We have to find the markets where we can build a lead that lasts for decades.

And then we have to stick with it. For the long haul. That’s exactly where we failed once before. About 15 years ago, Germany was the world leader in solar. We were ahead of the wave. Then we cut the subsidies. The Chinese kept subsidizing and took over the market. Our industry didn’t survive it. Today almost every solar cell comes from China.

We still live off the industries of the last century. But they have an expiration date. And if nothing new is ready by then, we’ll have nothing left.

In the end it all comes down to a single question. Do we keep putting our money and energy into preserving yesterday? Or into building tomorrow?

Germany’s time as a car nation is over. But what comes next is up to us.

🔗 vda | jobs | audi | china | solar | draghi

That’s all for today.

Until next week,

Philipp

PS: If you find value here, share it with someone who should read it too.

Want to work with me?

I help global B2B companies connect with 100,000+ automotive decision makers in Germany.

Learn how we can work together →

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Welcome to Issue #119 of The German Autopreneur.

15 years ago, German carmakers faced a decision. Build it themselves? Or buy it? The answer: buy. It’s just a commodity.

Today the battery is the most expensive part of an EV. And most of it comes from China. The industry feels those consequences every day.

That same pattern is repeating right now. This time with self-driving.

Your own car. The taxi you hail. The bus you take to work. All 3 will drive themselves in the coming years. And the technology behind it probably won’t come from Europe.

Today I’ll show you:

• How a research curiosity became a real market overnight

• Why this market is actually 3 different markets

• And how Europe is sliding into the next big tech dependency

Self-Driving Is Here Now

For years the line was: self-driving will come eventually. In early 2026, it arrived.

In the first 4 months, $21B poured into the market. More than 2024 and 2025 combined. Waymo alone raised $16B and is now worth $126B. More than Mercedes, VW, and Stellantis combined.

And this time, the money is no longer chasing hype. In 2024, 127 companies raised fresh capital for self-driving. In 2026, only 34. But total funding didn’t shrink. It’s 4 times larger. 3 of every 4 dollars go to Waymo. The winners are emerging.

The technology is being built in 2 places. The US and China. But it doesn’t stay there.

In the US, Waymo runs about 500,000 paid rides per week. Across 10 US cities. London and Tokyo come online this year.

In China, Apollo Go, Pony(.ai), and WeRide are on the road. Apollo Go in Wuhan. Pony(.ai) in Beijing, Shanghai, Shenzhen, and Guangzhou. WeRide in more than 40 cities worldwide.

Why is it suddenly moving so fast? Cost. Apollo Go builds its robotaxi for $28,000 today. Sensors and chips included. A robotaxi already costs less than most new private cars.

The experimental phase is over. But in Europe, not a single robotaxi operates without a safety driver.

3 Markets for Self-Driving. Europe Only Plays in 1

Use these 3 markets to make sense of every self-driving story in the years ahead.

Market 1: The private car

This is about private cars that drive themselves. The market closest to the traditional auto industry. 2 strategies are in play.

Strategy 1: Build everything in-house. Their own chips, their own software, their own car. Tesla, Xpeng, NIO, and Li Auto take this path. All of them are based in the US or China.

Strategy 2: Buy it. Every European automaker takes this path. I’ll show you how in a moment.

Market 2: The robotaxi

This is about cars you order through an app. No driver. They take you from A to B. Usually within a city.

• US: Waymo, Tesla, Zoox

• China: Pony(.ai), WeRide, Apollo Go

In London, 4 robotaxi services launch side by side this year:

• Waymo with its own app

• Uber with software from Wayve

• Apollo Go through Uber and Lyft

• Pony(.ai) via Bolt

And in the EU? The first commercial robotaxi service runs in Zagreb, Croatia. Operator: Verne. The vehicles: Arcfox from BAIC. The virtual driver: Pony(.ai). Both from China. Stellantis is building the same setup in Luxembourg. Also with Pony(.ai).

Market 3: The shuttle

This is about self-driving minibuses. They run fixed public transit routes at low speeds.

This is where Europe is supposedly ahead:

• MOIA from VW operates in Hamburg, Germany

• KIRA from Deutsche Bahn operates in Langen, near Frankfurt

• HOLON from Benteler launches in Jacksonville, Florida, in late 2026

But all of them run with a safety driver. And none of them builds its own virtual driver. They buy it from Mobileye in Israel. On top of that, they build the rest of the service themselves: vehicle, route, app, operations.

Even Mobileye itself doesn’t yet operate anywhere without a safety driver.

The only German startup with its own technology is MOTOR Ai in Berlin. They call themselves Germany’s Only Full-Stack Level 4 AV Startup.

Money Is Moving From Cars to Software

To play in any of these markets, you need 5 building blocks in the car:

1. The sensors. Cameras, LiDAR, radar. The eyes and ears of the car.

2. The compute chips. They process all sensor data in real time.

3. The virtual driver. The software and AI that actually drives the car.

4. The car itself.

5. The service. App, fleet, pricing, cleaning, support. Everything around the ride that touches the customer.

On top of that, 3 more things:

• Cloud compute to train the AI

• Experts who develop the AI

• A lot of capital. 10 to 15 years before the first dollar comes back

This is exactly where the battery pattern repeats. In a combustion car, the engine was the core and the most expensive part. In an EV, that role moved to the battery. In a self-driving car, it moves to the virtual driver.

And the virtual driver probably won’t be built 3 times. Once for the private car, once for the robotaxi, once for the shuttle. Once one player builds it cheaply at scale, that player serves all 3 markets.

It’s like Google licensing Android to dozens of phone makers. Tesla already runs the same software in private cars and robotaxis. In China, Xpeng licenses its virtual driver to VW. Whoever has the best and cheapest virtual driver wins in all 3 markets.

Anyone who doesn’t build the virtual driver themselves depends on a supplier for the most valuable part of the car.

On top of that, robotaxis will take over part of urban mobility. And whoever uses one orders it through an app. That app usually doesn’t belong to the automaker. It belongs to Uber, Lyft, or Bolt.

So value is moving away from automakers in 2 directions:

• Upstream to the technology players who sell them the virtual driver

• Downstream to the platforms that own the customer relationship

What’s left in the middle: building the car.

Where Do German Automakers Really Stand?

The bottom line up front: Mercedes, BMW, and VW still develop in-house up to Level 2. At Level 4, they don’t.

Why not? Because it’s very expensive and very slow. Waymo has existed since 2009. Alphabet has invested billions over 15 years. Only now are they starting to commercialize. No publicly traded European company waits that long for revenue. And Europe doesn’t have venture capital on a US or China scale.

In Q1 2026, Waymo raised $16B. Wayve raised $1.5B. Germany’s hope, MOTOR Ai, raised $18M.

With that gap, only one conclusion follows. German automakers can’t build the Level 4 virtual driver themselves. So they buy it.

Mercedes and BMW:

• Both shut down their own Level 3 programs in early 2026. The reason: Level 3 became irrelevant. The industry is moving directly from Level 2 to Level 4

• Both still have in-house solutions up to Level 2. Anything beyond that, they buy

• Mercedes uses NVIDIA globally. Momenta in China. Plus a stake in Wayve in London

• BMW uses Qualcomm and Mobileye. Also Momenta in China

Volkswagen:

• In Europe and the US: CARIAD develops software for Level 2 and 3. Qualcomm supplies the high-performance chips. Audi, Bentley, and Porsche also use Mobileye. The MOIA shuttles run on Mobileye too

• In China: VW paid $1B for a stake in Horizon Robotics. In their joint venture CARIZON (60% VW, 40% Horizon), the 2 companies develop software up to Level 2 and their own chips. VW also buys solutions from Xpeng and ZYT

Bosch:

• Bosch and CARIAD have developed software for VW group brands together for years. Based in Germany. Up to Level 3. Level 4 is explicitly off the table

• For robotaxis, Bosch supplies sensors, brakes, and compute. Bosch does not build the virtual driver

The picture is the same everywhere. For the most valuable building block, every German automaker depends on a supplier. From the US, Israel, China, or the UK. From the EU: nobody.

So Who Is Building the European Solution?

3 companies are trying.

Wayve in London:

• In February 2026, Wayve raised $1.5B. Valuation after: $8.6B. Investors: Mercedes, Stellantis, Nissan, Uber, NVIDIA, Microsoft, SoftBank

• Europe’s biggest hope. With 1 catch: they’re based in the UK, outside the EU

MOTOR Ai in Berlin:

• The only German startup trying to build the full stack itself. Sensors, chips, virtual driver. Their own technology for Level 4

• On funding, they’re in a different league from Waymo or Wayve. But the only team in Germany with this ambition

Verne in Zagreb:

• In April 2026, Verne launched the first commercial robotaxi service in the EU. Robotaxis powered by Pony(.ai). From China. Still with a safety driver for now

• Background: Verne received about $190M in EU funding. The condition: the technology had to be European. The original plan was for its own robotaxi with Mobileye as the virtual driver

• But the in-house development wasn’t ready in time. 5 days before the funding deadline, Verne announced the partnership with Pony(.ai) and Uber. 1 day before the deadline, the first paid ride took place. With a robotaxi from China

I wrote about this on LinkedIn a few weeks ago. In the comments, the CEO clarified that the EU funding went exclusively to in-house development. The Chinese robotaxis were paid for with private capital from external investors. According to him, the 2 buckets stayed strictly separate.

Whether that explanation holds or not, Verne represents a pattern. Europe can’t get its own technology on the road in time. And in the end, the order goes to China.

My Take

15 years ago, with the battery, German carmakers could still say they didn’t see it coming. With self-driving, Europe shouldn’t make the same mistake. The shift is happening in real time. Europe could push back. But it isn’t.

How? China and the US show how.

China keeps foreign technology out. Not through a single law, but through several rules:

• Data can’t leave the country

• Only licensed companies can create maps

• Every software update needs prior approval

That’s why Mercedes, BMW, and Audi have to buy their China software from Momenta. They don’t have a choice.

The US blocks Chinese robotaxi technology outright. Chinese software is banned from 2027. Chinese hardware from 2030. The main argument: national security.

The other clear driver: protecting their own industry. Robotaxis will be a cost game. Whoever scales cheapest wins. And at scale, nobody will match China.

Open your market to China now, and no domestic industry will emerge. The US understands that.

Europe could do the same. One rule would be enough. Anyone who wants to run a self-driving service in Europe has to use European technology. Private car, robotaxi, or shuttle.

That would be a political decision. It would trigger private investment in a European industry overnight.

It won’t be made.

With the battery, we couldn’t fully see the consequences 15 years ago. This time, we can. And we’re watching it happen anyway.

PS: Big thanks to for the conversation that shaped this analysis.

🔗 re | way | dam2 | ele1 | rt | hr | tnw | dam | bis

That’s all for today.

Until next week,

Philipp

PS: If you find value here, share it with someone who should read it too.

Want to work with me?

I help global B2B companies connect with 80,000+ automotive decision makers in Germany.

Learn how we can work together →

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Welcome to Issue #118 of The German Autopreneur.

A few things happening right now:

• BYD starts production in Hungary

• Chery produces cars in a former Nissan plant in Barcelona

• Stellantis builds Leapmotor cars in Spain

• Geely takes over part of a Ford plant in Spain

• Xpeng wants to acquire a VW factory

• Xiaomi is aggressively hiring BMW, Porsche, and Mercedes talent in Munich

• And BYD wants to take over VW’s Transparent Factory in Dresden

Chinese automakers are no longer coming to Europe as importers. They’re coming as manufacturers, technology suppliers, partners, and employers.

The question: Will Europe be a partner? Or China’s assembly line?

Today we’ll look at:

• Why the first wave of Chinese automakers in Europe failed

• The 4 strategies they’re using now

• What this really means for the European auto industry

How Chinese Automakers First Tried to Crack Europe

2-3 years ago, the fear in Europe was clear. A Chinese tsunami of cheap EVs would flood the market. European manufacturers would be wiped out.

That’s not what happened.

But let’s go back to the beginning.

In 2007, SAIC bought British heritage brand MG. In 2010, Geely acquired Volvo.

The idea: Building a brand from scratch in Europe takes years. Faster to buy one that already has trust.

The real push came later:

• NIO launched in Norway in 2021

• BYD brought its first models to Europe in 2022

• MG sold 233,000 units in Europe in 2024. 5x more than in 2021

Things seemed to be going really well.

JPMorgan predicted 20% market share for Chinese manufacturers in Europe by 2028. Brussels started openly discussing protective measures for the first time.

By late 2024, the EU introduced tariffs on Chinese EV imports. Direct imports became much more expensive overnight.

The result? MG’s EV sales dropped 58%. Their electric share fell from 47% to 30%.

And beyond tariffs, Chinese brands struggled. NIO bet on its own stores and direct sales in Germany. No traditional dealers. That model works in China. In Germany, it didn’t. In Q1 2026, NIO registered 8 new cars in Germany. Down 87.5%. NIO abandoned its direct sales model.

What works in China doesn’t automatically work in Europe. Chinese automakers had to learn that the hard way. Just like German automakers had to learn the same lesson in China.

Chinese brands’ market share in Europe by the end of 2024: about 4%. In 2025: 6%.

So the Chinese didn’t steamroll Europe. But nobody gave up either. Quite the opposite. They completely rebuilt their strategy.

The 4 Strategies They’re Using Now

1) They’re producing in Europe

The EU tariffs worked. Direct imports are less profitable. Producing in Europe is cheaper than importing with tariffs.

The answer: Assemble the cars directly in Europe. Either build new factories. Or take over existing ones.

• BYD built plants in Hungary and Turkey. Now they’re negotiating with Stellantis and other EU manufacturers to take over underutilized factories

• Geely is taking over part of a Ford plant in Spain

• Chery assembles cars in a former Nissan plant in Barcelona

• MG plans its own factory in Spain

• Xpeng has Magna Steyr in Graz build its cars and is negotiating with VW for a German plant

• Stellantis is openly considering selling 4 European factories to Chinese partners

What European carmakers no longer need, the Chinese do.

Where the Chinese invest isn’t random. The money flows into countries that didn’t vote for the tariffs. Poland voted in favor. Stellantis then moved Leapmotor production to Spain. Spain had abstained.

For the Chinese, local production has a positive side effect. It bypasses tariffs. And creates local jobs. That reduces political resistance and builds acceptance with customers.

2) They’re selling their technology to European brands

In China, European manufacturers already use Chinese partners’ technology to catch up. VW builds on Xpeng’s platform. Audi on SAIC’s. Mercedes and BMW use technology from Momenta.

Until recently, the rule was: What happens in China stays in China.

That’s changing. Chinese technology is now inside cars sold in Europe:

• The Volvo EX30 runs on Geely’s platform

• The Smart #1 and #3 also run on Geely’s platform

• The Dacia Spring is essentially a Dongfeng. Just with a Dacia badge

Most buyers probably think these are European cars.

European manufacturers are buying Chinese technology instead of developing their own. That has never happened before.

For 40 years, the direction was clear. Cars were developed in Europe and assembled in China. China was the manufacturing base. Now that’s reversing.

• VW CEO Oliver Blume is now considering offering China-developed models in Europe too. Until now, those only went to Southeast Asia, the Middle East, and South America. He’s also looking at opening European factories for Chinese partners

• And the next Opel electric SUV will run entirely on a Leapmotor platform. More on that in a moment

3) They’re hiring European talent

Xiaomi hasn’t sold a single car in Europe. But they’re already here. In 2025, they opened a research center in Munich.

Xiaomi watched other Chinese automakers fail in Europe. Their answer: Get the people first. Then bring the cars. They’re actively recruiting BMW, Porsche, and Mercedes employees. The packages are well above what their previous employers offered. Everyone who switches isn’t building German cars anymore. They’re building Xiaomis for the European expansion.

What Xiaomi does well: publicity. Their first car was a Porsche clone with seriously good software. Everyone laughed at first. Then the entire world started talking about Xiaomi as a carmaker. Marketing: A+.

In China, the concept worked. Last year they sold over 400,000 cars. After 16 months, the car division was profitable. Now they want to bring that to Europe. Launch is planned for 2027.

4) They’re starting joint ventures with European manufacturers

Selling cars the Chinese way doesn’t work in Europe. NIO proved that. And building a brand from scratch takes years. BYD hasn’t had its big breakthrough despite its Euro championship sponsorship. So what do you do? You find a partner who already has everything you need.

This model is familiar. In China, the deal was clear for decades: If you wanted market access, you had to enter a joint venture with a local partner. Market access in exchange for technology transfer.

In Europe, the exact same thing is now happening. Just in reverse. And voluntarily. The first example: Stellantis and Leapmotor.

A Chinese automaker partners with a European group. They share factories, distribution, and service networks.

Let’s take a closer look.

Stellantis Is the Junior Partner of a Chinese Startup

October 2023. Then-Stellantis CEO Carlos Tavares signed a deal with Chinese automaker Leapmotor. Stellantis bought 21% of the company. They also created a joint venture for production and distribution of Leapmotor cars outside China. Stellantis holds 51%. Leapmotor 49%.

June 2024: The first Leapmotor cars rolled off the line in Poland. 2024: 1,300 units sold in Europe. In 2025, Stellantis opened its sales network. Over 800 retail locations across more than 10 countries. Result: 40,000 units sold. 30x in 12 months. In Q1 2026: another +706%.

A Chinese automaker that almost no one in Europe knew 2 years ago is taking off. Thanks to European infrastructure.

May 2026: Stellantis wants to build the next Opel electric model on a Leapmotor platform. At the same time, Stellantis is cutting 650 engineering jobs in Rüsselsheim, Opel’s development headquarters near Frankfurt. That expertise isn’t coming back. Development now happens in China. What stays at Opel: body design and chassis tuning. Platform, powertrain, and software come from China.

On paper, it looks like the perfect deal. Stellantis gets technology. Leapmotor gets market access.

In China, the formula was clear for decades: market access in exchange for technology transfer. This time, the Chinese want market access. And Stellantis opens the door. But Leapmotor isn’t sharing technology. Stellantis assembles and sells. Development stays entirely in China.

Carlos Tavares himself brokered the deal. After leaving Stellantis, he said about Leapmotor: “They want to swallow us eventually. I’m aware of that.”

What does he mean? Geely founder Li Shufu once put it bluntly: “You can’t buy core technology. The more you rely on someone else’s technology, the more dependent you become.”

My Take

On the surface, things actually look pretty good. The Chinese tsunami never arrived. The tariffs worked. Chinese brands aren’t flooding Europe with cheap imports. They’re building factories. Creating jobs. Investing in Europe. There’s even a first joint venture modeled on the Chinese approach.

The catch: The technology doesn’t come with it.

What the Chinese are bringing to Europe is production. What stays in China? Everything that actually makes a car valuable today.

And that’s the irony. 2 years ago, the EU wanted to protect European industry from Chinese competition with tariffs. Today, it’s European industry itself that’s voluntarily inviting the Chinese in through partnerships.

On paper, Stellantis holds 51%. In reality, Stellantis is the junior partner. Leapmotor has been building cars for 7 years. Stellantis for over 100. And still: Leapmotor develops the product. Stellantis helps with assembly and sales.

The Stellantis-Leapmotor joint venture is the prototype for Europe as China’s extended assembly line.

The European auto industry is cutting tens of thousands of jobs right now. And yes, Chinese companies are building factories in Europe. And yes, that creates jobs. But most of them are basic production jobs. Not engineering. Not development. And if we’re honest: these are exactly the jobs that will be automated away within 10 years. We already know that.

But it doesn’t have to go this way.

Because right now, Europe has the strongest negotiating position in years. China has over 100 automakers. Far too many. Only a fraction will survive. They all need to expand abroad. The pressure to break into Europe is enormous.

Europe has something they desperately need: market access.

The conditions for a good deal have never been better.

And China spent 40 years teaching us how that deal works: market access in exchange for technology transfer.

Europe could use the same lever today. But it’s not.

Instead, Europe is entering joint ventures where it handles distribution. And China keeps the technology.

Don’t get me wrong. Joint ventures with Chinese automakers are exactly the right path. I’m all for it. But only on terms that build real technological competence in Europe.

Without that, Europe isn’t a partner. It’s just China’s assembly line.

🔗 re | re2 | car | scmp | bl | eco | ace

That’s all for today.

Until next week,

Philipp

PS: If you find value here, share it with someone who should read it too.

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Welcome to Issue #117 of The German Autopreneur.

“Unless things change, we will not survive.”

That’s a direct quote from the CEO of the world’s largest automaker. Larger than Volkswagen. Larger than BYD. Larger than Mercedes, BMW, and Audi combined.

Toyota. 11.3 million vehicles sold last year. Global number 1 for the 6th year running. Record revenue. The highest operating margin among major volume manufacturers.

You hear this a lot in Germany: Toyota never went all-in on EVs. And now they’re sitting back, watching VW and Mercedes flail.

Toyota is doing everything right. At least that’s the story.

In late March, CEO Koji Sato stood before 700 of Toyota’s most important suppliers. It should have been a moment for good news. Sato thanked the suppliers. Then he said:

“Unless things change, we will not survive. Right now, we in the automotive industry are battling for our very survival.”

Toyota just posted record numbers. And says: we’re fighting to survive. How does that add up?

Today we’ll look at:

• What the numbers actually say

• Where Toyota stands on transformation

• What legacy automakers can learn from Toyota

Record Revenue, Crashing Profit

Toyota’s fiscal year runs April to March. FY26 just ended. The numbers came out on Friday. All yen figures converted to US dollars (approx. $1 = ¥150, Toyota’s own FY27 planning rate).

• $338 billion in revenue (+5.5%). Record. First Japanese company to cross 50 trillion yen.

• 11.3 million vehicles sold (+2.5%). Also a record.

Now the other side:

• $25 billion in operating profit (-21.5%). That’s 7.4 cents per dollar of revenue. Still more than any other major volume manufacturer.

• FY27 outlook: $20 billion operating profit (-20.3%). Margin drops to 5.9%.

• Profit peak in FY24: roughly $33 billion. From peak to FY27 outlook: -39%.

• Last quarter alone: operating profit -49%.

Revenue is breaking records. Profit is breaking down.

Toyota Has a Trump Problem

When revenue rises and profit crashes, it’s either price or cost. For Toyota, it’s cost.

The causes are external:

• US tariffs hit Toyota with $9.2 billion in additional costs.

• The Iran crisis is driving up aluminum prices. Toyota’s outlook includes $4.5 billion in extra costs tied to the Middle East. Japan’s auto industry imports roughly 70% of its aluminum from the region.

• In North America, Toyota posted an operating loss: $1.3 billion.

Toyota has a Trump problem.

And yet, at 7.4% operating margin, Toyota is in better shape than the German manufacturers. VW came in at 2.8% in 2025. Mercedes at 5.0%.

Will next year be better? No.

Toyota’s own FY27 outlook: 5.9%.

Since April, Toyota has a new CEO: Kenta Kon. On Friday’s earnings call, he didn’t sound optimistic either:

“It is impossible to predict what the market will look like.”

His CFO: “Our measures are only effective in the short term.”

In plain English: Nobody knows what happens next.

Toyota is still making money. But the cash that should flow into technology is being eaten up by tariffs and raw materials.

Toyota Missed Its Own EV Targets

In the West, there’s a popular take: Toyota was smart not to lock itself into one powertrain technology. That’s only partly true.

In 2021, then-CEO Akio Toyoda announced 3.5 million EV sales by 2030. His successor Koji Sato raised the bar in 2023: 1.5 million per year by 2026.

Actual result: roughly 243,000. 84% below their own target. By comparison, VW sold close to 1 million EVs in 2025. 4 times as many as Toyota.

Toyota didn’t strategically hold back. Toyota missed its own EV targets by a wide margin.

This year, Toyota is aiming for 600,000 EVs. 40% of the original 1.5 million target.

Hybrids are keeping Toyota afloat. Toyota expects over 5 million hybrid sales this year. Nearly every other Toyota sold is a hybrid.

China shows how Toyota plans to catch up. Toyota’s entry-level EV is the bZ3X. But the platform isn’t Toyota’s. It comes from GAC, their Chinese joint venture partner.

Toyota develops almost everything in-house. Its own technology, tight supplier relationships, full control. But on future technologies, they can’t keep up alone. So they’re getting help from outside. From Chinese partners.

Toyota’s Software Stack Is Just Getting Started

For software, Toyota built a dedicated unit: Woven. Comparable to VW’s CARIAD. The result: Arene. An operating system for the car.

The vision: software and hardware fully decoupled. Over-the-air updates. New features without a new car.

The first model running Arene launched in May 2025.

The reality so far: Arene only handles infotainment and driver assistance. Everything else still runs on traditional control units from suppliers. When does the full software stack arrive? “For the next EV generation.” No date.

In the Gartner Digital Automaker Index 2025, Toyota ranks 21st out of 24. Behind all German manufacturers.

A Woven engineer describes the current state: “Horrendous, full of bugs.”

The problem is familiar. Traditional vehicle development runs on zero-defect tolerance. A brake can’t be buggy. Software development works the opposite way: ship fast, fix later, iterate.

Toyota has perfected hardware logic like no one else. And that’s what makes the leap to software so hard.

VW gave up building its own stack and now buys it from partners. Toyota is still trying to do it alone.

Toyota Builds AI for the Factory. Not for the Car

Toyota’s cars can do what most new cars can do today. Lane keeping, adaptive cruise control, emergency braking. Driver assistance at Level 2.

For true autonomous driving, Toyota has no in-house solution. They’re working with a Chinese partner. Since February 2026, self-driving Toyotas have been running in Guangzhou with Level 4 technology from Pony(.ai). Toyota provides the vehicle. Pony(.ai) provides the brain. Same pattern as with EVs.

But Toyota’s own AI work happens elsewhere. At the foot of Mount Fuji, Toyota is building a test city: Woven City.

The first residents moved in during fall 2025. There, Toyota is testing AI models that predict traffic accidents. Estimated investment: roughly $10 billion.

Last week, Toyota announced its own AI platform for manufacturing. Toyota’s goal: “To protect jobs, not replace workers.”

The rest of the industry is betting that AI inside the car will become a competitive advantage. Toyota’s own AI investments flow less into the car and more into production. The technology for the car? Toyota buys it from Chinese partners.

Three times the same pattern. Powertrain, software, AI. Wherever the future matters, Toyota is either struggling or buying from outside what it used to build itself.

And the core business keeps humming. 11 million cars. Record revenue. It’s never been better.

But that’s the problem. Why change something that still works this well?

My Take

I first visited Japan in 2019. In a small bar in Asakusa, Tokyo, I met this nice old Japanese guy. He had spent his entire career at the company that runs Tokyo’s subway system.

One job. One company. He never left Japan. When he got older, he started learning English. He wanted to talk to tourists. He told me it was his way of getting to know the world.

I’ve been back to Japan several times since. A career like his is the standard there. You don’t switch jobs. You get better within your system.

Toyota turned this culture into a management model. The business world knows it as the Toyota Way. Optimize every process over decades. Keep key technologies within your ecosystem. Make everything fit together perfectly.

This system made Toyota the world’s largest and most profitable automaker. When the game is optimization, Toyota is unbeatable.

But the game isn’t just about optimization anymore. Wherever the challenge is reinvention, Toyota struggles.

The problem: today’s business has an expiration date. A big chunk of Toyota’s profit doesn’t come from new cars. It comes from servicing roughly 150 million Toyotas worldwide. Maintenance, spare parts, service visits. EVs need 30-40% less maintenance. When cars update themselves, they often don’t need a service center. And Toyota won’t sell hybrids forever.

Toyota lives off a business model that won’t work in 10 years. And the better it works today, the harder it is to let go.

Toyota knows this. That’s how to read the March statement: “Unless things change, we will not survive.”

Toyota’s system was built over decades for stability and perfection. A system like that doesn’t change from within. It takes harsh words. Saying “we will not survive” in front of 700 suppliers was exactly that. A wake-up call. The first step toward making change possible at all.

This pattern isn’t unique to Japan. In the German auto industry, I’ve seen the same thing. Companies don’t fail because of technology. They fail because of organization and culture.

For Japan, that might be even more true than for Germany. Stability and perfection aren’t just embedded in the organization. They’re embedded in the culture itself.

Toyota is doing a lot of things right. But “right” isn’t enough anymore.

🔗 to | an | bl | ft | wsj | cnbc | re

That’s all for today.

Until next week,

Philipp

PS: If you find value here, share it with someone who should read it too.

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For today’s newsletter, I spoke with Alexander Timmer and Fritz Metzger from Berylls by AlixPartners. Both spent 5 days on the ground at Auto China 2026 in Beijing. Their observations and analysis shaped this issue.

Disclaimer: Berylls by AlixPartners had no influence on the content of this newsletter.

Welcome to Issue #116 of The German Autopreneur.

Mercedes CEO Ola Källenius: “I am Chinese.”
VW’s China chief: Young customers see us as their parents’ brand.
And an analyst from Shanghai: “German brands are being ‘murdered’ by their own legacy and a resistance to rapid change.”

3 quotes from Auto China 2026. The largest auto show in the world. And the entire German automotive industry was there.

The numbers explain why people are saying things like this:

In 2019, German manufacturers held 26% market share in China. Today: 16%. More than a third gone in 6 years.

For pure EVs, the German share sits at 1.6%. And that’s the segment where everything is at stake right now.

Today we’ll look at:

• Why the powertrain no longer decides the winner in China

• Why “Made in Germany” is becoming a liability in China

• And why German automakers are going Chinese

One Foot in the Old World

The first thing you notice walking through Auto China:

The German stands are split in two. One side for combustion cars. The other for EVs.

Fritz from Berylls calls the two sides the “old world” and the “new world.” The old world is combustion. The new world is what the Chinese call the “Smart Car.”

And the focus in Beijing is clearly on the new world.

At Chinese manufacturer stands, there is no such split. For them, only the new world exists.

That’s the vibe of Auto China 2026.

The German industry stands with one foot in the old world and one in the new. And nowhere is that more visible than here. At the center of the new world.

Software Is the New Battery

What really separates the two worlds isn’t the powertrain.

Back in Germany, we still love to debate which powertrain has a future.

In China, that question is settled. Fritz puts it plainly: “EV is a done deal from a Chinese perspective.”

But when the powertrain is no longer a selling point, competition shifts. The question is no longer: How does the car drive? It’s: What can it do?

In the past, you differentiated on quality and powertrain.

That’s changed. Chinese manufacturers have reached a comparable level on quality. Same on powertrains. Range, charging speed, efficiency: in everyday use, there’s no meaningful difference anymore.

What counts now: software. AI. Speed. Software and electronics alone account for 30-40% of a car’s total cost. Alexander puts it this way: “What used to be the battery is now the software stack.”

Premium in China now means AI in the cockpit. Autonomous driving. How naturally the car fits into a digital life.

Local players are setting the standards. Whoever builds the smartest car defines what premium means. And right now, that’s not the Germans.

This is exactly why the old logic has flipped. “Made in Germany” is no longer a seal of quality. It’s becoming a problem. In China, it’s increasingly read as “not smart enough.”

But this isn’t just about the premium segment. The industry is seeing a kind of democratization of technology.

Here’s how it used to work: new technology arrived first in the S-Class, then the C-Class, then the A-Class. Premium buyers subsidized the development.

That mechanism no longer works in China.

There, high-tech goes straight into the mass market. BYD already puts LiDAR sensors and advanced driver assistance into the Seagull. For under $16,000.

The tech race runs in every price segment. And to stay in it, you have to move fast.

German manufacturers traditionally developed a new car in 4 years. The problem: by the time it hits the market, the technology is already 4 years old.

VW unveiled the ID. UNYX 09 in Beijing. Built on an Xpeng platform. In just 24 months. A real milestone. VW has cut its development time in half.

The absurd part: even that makes VW twice as slow as the Chinese benchmark. Some manufacturers now develop on an existing platform in 8 to 12 months.

How do you get to that speed? And why can’t German companies?

Market analyst Chris Liu says: “The real gap is software execution. A talent problem, above all.”

Not money. Not manufacturing. Talent and capabilities.

And if you don’t have those, you need partners.

In China, You Can’t Do It Without Chinese Partners

German manufacturers work with Chinese partners in China. Not occasionally. Systematically.

Berylls estimates that between a quarter and a third of all vehicles at the show were co-developed with a tech partner. Huawei, Xpeng, and others.

And the Germans aren’t the only ones. Hyundai is doing the same: “Designed in China, by China, for China.”

This plays out on 3 levels. 2 are already visible. The third is taking shape:

1. Buying components: Mercedes and BMW are using Momenta for autonomous driving. BMW integrates DeepSeek in the cockpit and relies on Huawei and Alibaba for the new iX3. Here, the OEM buys a specific tech capability from a partner.

2. Buying the platform: Here, the partner no longer provides a single module but the complete technical foundation of the car. A platform is the underlying hardware and software architecture everything is built on. VW uses Xpeng’s platform. Audi went further with SAIC and launched its own sub-brand. “AUDI” in capital letters. Without the 4 rings.

3. Licensing the brand: That hasn’t happened yet. But at level 2, the partner is already providing nearly everything. The next step: the Chinese manufacturer builds the car entirely and slaps your logo on it. In exchange, they pay you licensing fees for the brand. From a German perspective, that would obviously be the worst case.

The question: Are these partnerships a transition phase while German manufacturers build their own capabilities? Or is this the new normal?

Berylls has a clear answer: it’s permanent. Alexander says: “If this step had been taken 2 or 3 years earlier, we’d be talking about a balance of power today. Now the gap is too wide.”

What he means: the gap in software and AI has grown too wide. German manufacturers can no longer close it on their own.

The danger: the longer a platform sits with a partner, the more knowledge accumulates there. Whether that knowledge ever flows back into German organizations is an open question.

Which raises another one: what does the German manufacturer actually do anymore? If partners supply most of the product?

Alexander puts it bluntly: “You could reduce it to assembly and systems integration.”

Meaning: the individual components come from the partner. The German manufacturer assembles them into a car.

My Take

VW CEO Oliver Blume describes the China partnerships as “unavoidable, because you can’t do everything yourself and don’t want to.”

Sounds plausible. A modern car requires software, driver-assistance systems, chips, AI, cloud backend. All far from the core competency of a traditional automaker.

But there’s another way. Some automakers do all of this themselves. Tesla, Xpeng, Nio, and a handful of others. The industry calls this vertically integrated. Or full-stack.

So it’s possible. Why can’t the Germans do it?

The short answer: they tried. Twice.

Attempt 1: Build products for the new world using the existing organization. Didn’t work.

The lesson: you can’t build new-world products inside an old-world organization.

So attempt 2: Transform the old organization. Or build a new one alongside it. VW built a dedicated software unit for this: CARIAD. Also didn’t work.

The next lesson: you can’t build a new-world organization close to the old one. The old suffocates the new. Institutional inertia, entrenched power structures, the famous “this is how we’ve always done it.”

And that’s exactly what brought us here.

That’s the reason for the partnerships. And why more and more development is moving to China.

In Germany, we tend to explain this with 2 standard answers:

1. The global car no longer works. Meaning: developing one product in Germany that works everywhere. But that’s not really accurate. Tesla develops centrally in the US. One product. For the whole world. The issue isn’t location. It’s how technologically innovative the product is.

2. Bureaucracy and site costs. Both true. But if cost were the only factor, nobody would still develop in Silicon Valley. Development jobs are the most valuable jobs. You don’t offshore them because of cost. So this doesn’t explain why development specifically is moving to China.

The real reason goes deeper. And once again, it’s the organization.

You can’t rebuild the old organization into the new world. So you build a new one. Far away from the old one.

That’s exactly what’s happening right now.

“In China for China” doesn’t just mean: develop closer to the customer. Above all, it means: build a new organization. One that can actually deliver products for the new world.

That’s what we saw at Auto China 2026. German manufacturers building new organizations in China. With new partners, new processes. And a new speed.

Fritz says: in not a single conversation at the show did anyone write off the Chinese market as lost.

And that’s the good news:

What they’re building there isn’t just new products. It’s a new way of working. Exactly what the home organization failed to deliver.

The hope: what they’re building in China eventually comes back to Germany. Not the products. But the way they develop them.

🔗 berylls | re | ft | hb | re2 | zdf

That’s all for today.

Until next week,

Philipp

PS: If you find value here, share it with someone who should read it too.

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Welcome to Issue #115 of The German Autopreneur.

Bosch is the world’s largest automotive supplier. Number 1 for over a decade. €91 billion in revenue. 412,000 employees.

And yet Bosch flies under the radar. The reason: no stock listing, no quarterly earnings, no investor calls. Bosch is enormous. And almost invisible.

Bosch released its 2025 annual results. For the first time since 2009, the company slipped into the red.

And CEO Stefan Hartung calls 2026 the “year of progress.”

Bosch posts its first loss in 16 years. The CEO talks about progress. How does that add up?

Today we’ll look at:

• Why Bosch is now losing money

• How Bosch is using the crisis to restructure

• And what China has to do with it

Suppliers Are Getting Hit Harder Than Carmakers

We talk a lot here about the crisis at VW, Mercedes, and BMW. Less about the suppliers. But they’re getting hit harder:

• Mahle closed 6 plants in Europe and North America in 2024. 4 more are on the way.

• According to EY, around 73,000 jobs have disappeared at German suppliers since 2019. Nearly 1 in 4.

Bosch is the biggest of them. And Bosch isn’t immune.

Here are the 2025 numbers:

• −€400 million net loss (first loss since 2009)

• €1.8 billion operating profit

• €300 million cash flow (a third of the prior year)

• 22,000 jobs cut in the Mobility division in Germany

• €2.7 billion set aside for workforce reductions

• €15 billion China revenue in Mobility (more than 50% from Chinese manufacturers)

In 2023, operating profit was €4.8 billion. In 2024, €3.1 billion. Today, €1.8 billion. Down 62% in two years. For every euro of revenue, 2 cents remain. Bosch pushed its 7% return target from 2026 to 2027.

Why Are the Numbers This Bad?

The CFO’s official explanation: “One-off effects, separate from the underlying business performance.” Translation: everything under control, the core business is fine.

The numbers tell a different story.

Bosch’s core business is the powertrain. Injection systems, sensors, control units. A combustion engine has over 1,200 mechanical parts. Bosch supplies a large share of them. That’s how Bosch became the world’s largest automotive supplier.

Electric mobility is shrinking this business. An electric powertrain needs far fewer parts.

Inside Bosch, they’ve turned this into a rule of thumb. Where diesel manufacturing needed 10 people, gasoline engines need 3. Electric powertrains need 1.

That’s the math behind the 22,000 jobs.

So: the core business is shrinking. Bosch needs something to replace it.

The obvious answer would have been battery cells. The most expensive component in an EV.

But Bosch decided against it. And the reasons go back further than you’d think.

In the mid-2000s, Bosch made a big bet on solar energy. The bet: photovoltaics would be the next billion-dollar market. They bought companies, built plants, and launched a dedicated Solar Energy division.

Then Chinese manufacturers entered the market at far lower prices. Solar cell prices collapsed between 2008 and 2012. Bosch couldn’t compete. The final tab: €3.7 billion in losses. In 2014, Bosch exited the solar business entirely.

That left a mark. Since then, one simple rule has taken hold in the boardroom: never again compete against China in mass manufacturing.

In 2018, Bosch made the decision that locked everything in. It exited battery cell production before it had even properly started.

The official reason: it would take €20 billion just to be a meaningful player. Too expensive. Too risky. Unofficially? After the solar disaster, nobody on the board wanted to go up against the Chinese again.

Today, CATL, BYD, and LG control the global battery market.

Bosch supplies components. But not cells.

German automotive analyst Stefan Bratzel sums it up: “Suppliers fundamentally misjudged the industry’s direction.”

Bosch has full exposure in a shrinking combustion market. And insufficient exposure in the markets growing to replace it. That gap is now visible in the balance sheet.

Restructuring Has a Price

The result: 22,000 jobs cut in Bosch’s Mobility division in Germany. €2.7 billion set aside to cover it.

At the same time, Bosch is looking for new ground beyond the auto business. In 2025, they acquired Johnson Controls’ climate-control business for around €7.4 billion. The largest acquisition in company history. A visible step away from Mobility dependence.

Bosch is financing the restructuring through bonds. €8.5 billion over 2.5 years. That’s unusual. Historically, the company has avoided debt. The bonds fund the acquisition. And the job cuts.

How Can Bosch Pull All This Off Simultaneously?

Bosch has no shareholders. No quarterly reports. No capital market pressure.

• 94% of shares belong to the Robert Bosch Foundation. A nonprofit foundation has no owners. Profits don’t flow to investors but to projects in health, education, and science.

• 93% of voting rights sit with the Robert Bosch Industrial Trust. A small body made up of family members of founder Robert Bosch and long-serving Bosch managers. They make the strategic decisions and appoint their own successors.

The common criticism of German corporations: they only think as far as the next quarter. Bosch doesn’t have that problem. They can plan their transformation over 5 or 10 years.

And they’re using that. €7.9 billion is going into R&D in 2025, in new fields like sensors, AI, and robotics.

Just not where most people are looking.

The Future Is Being Built in China

The logical assumption would be: new technologies emerge where the old ones fade. Same plants. Same people. Different product.

That’s not how it works.

The next wave of automotive technology isn’t coming from Europe. It’s coming from China. The world’s largest car market. That’s where new systems get developed, go into production, and reach customers. Europe gets them later.

One example: The XPeng GX has been in production since March 2026. With Bosch’s latest steer-by-wire system. That’s steering with no mechanical connection between the steering wheel and the wheels. A prerequisite for autonomous driving. Mercedes is also bringing steer-by-wire. But later. After the Chinese.

A Chinese car is running Bosch’s newest technology before it arrives in a German one.

And this is not a one-off.

In February 2026, during German Chancellor Merz’s state visit to Beijing, Bosch signed a major contract with Nio. Chassis, steering, drivetrain, battery management, sensors.

With Nio, Bosch moves from component supplier to system partner. Across all 3 of Nio’s brands: Nio, Onvo, and Firefly.

More than 50% of Bosch’s China revenue already comes from Chinese manufacturers. Rising.

The reason is straightforward: Chinese manufacturers decide faster, integrate faster, and bring new technology to production earlier. Bosch keeps moving more of its value chain to China. Its own development, its own production. In China, for China.

What shrinks in Germany grows in China. Not necessarily because Bosch wants it that way. But because that’s where the markets of the future are forming.

The fear of China didn’t keep Bosch away from China. It pushed Bosch toward it.

My Take

I’m from a small town called Leonberg, just outside Stuttgart. Bosch had plans to build a tech campus there for 2,500 people. The foundation pit had already been dug. Then Bosch scaled back the plan. The result: half a campus. And a foundation pit that got filled in again.

The jobs are going somewhere else now.

A few kilometers away is Feuerbach. Bosch’s historic home base. For over 100 years. Generations of engineers walked in every morning and walked out every evening feeling like they were part of something big. Bosch developed and built injection systems here for decades. Now 2,500 jobs are disappearing from that site alone.

The losses give Bosch the justification. Without a crisis, Bosch probably couldn’t push this through.

But this restructuring has a price that Bosch isn’t paying. The southwest of Germany is.

Where I’m from, there’s a local saying: “I schaff beim Bosch und halt mei Gosch.” I work at Bosch and keep my mouth shut. Swabians (the people from this region) love to complain. But at Bosch, there was nothing to complain about. Secure job, good money, pride in the product. That was the deal.

Around Stuttgart, a unique ecosystem grew over decades. Bosch in Feuerbach. Mercedes in Sindelfingen. Porsche in Zuffenhausen. Mahle in Stuttgart. A large part of Germany’s automotive success story was written here. This is where Made in Germany was forged. Suppliers and manufacturers side by side. When Mercedes needed a new component, the Bosch engineer was sitting in the meeting an hour later. Short distances, shared knowledge, fast iteration. That was the secret behind the technological lead.

The problem: this ecosystem depended on one technology. The combustion engine. And it was never reinvented for what came after. It never got an update. The model still works. Just not here anymore.

Today, the most advanced automotive ecosystem in the world is in China. Essentially the same playbook as the southwest of Germany. Just 8,000 kilometers further east. And the companies from Stuttgart are helping build it.

Around 235,000 jobs across Germany depend directly on the combustion engine. 55,000 of them in this region alone.

CEO Stefan Hartung calls it the “year of progress.” For this part of Germany, it feels more like a farewell. The region lived off the combustion engine for decades. It’s losing more than jobs. It’s losing a piece of its identity.

If Bosch’s transformation works, what emerges is a global tech company. But one that has left its home behind.

Bosch isn’t officially giving up on Germany. But structurally, it is.

The foundation pit in Leonberg is filled in. The foundation pits in Beijing are being dug right now. Bosch will survive this. Just somewhere else.

🔗 hb1 | hb2 | wiwo1 | wiwo2 | faz

That’s all for today.

Until next week,

Philipp

PS: If you find value here, share it with someone who should read it too.

Want to reach European automotive decision makers?

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Learn how we can work together →

Welcome to Issue #114 of The German Autopreneur.

“Real AI adoption will reduce management layers. And that’s exactly what no one inside these companies actually wants.”

That’s what an insider at a German automaker told me. One of many.

It started with a newsletter where I made a case: AI will replace the highest-paid jobs in the auto industry first. I ended it with a survey. 293 people responded. Since then, I’ve had dozens of background conversations with insiders.

I wanted to understand: where does the German auto industry actually stand on AI?

Officially, everything looks fine. Budgets approved. Copilot rolled out. Strategy on the slides.

The reality inside these companies is something else.

Today we’ll look at:

• What 293 insiders said anonymously about AI

• Why, once again, the problem isn’t the technology. It’s the system

• Why the pressure is coming from China and the US

The Data

Who responded?

• 48% from OEMs and suppliers

• 37% decision-makers from executive management, boards, and division leadership

• Plus individual conversations with insiders from OEMs, suppliers, and tech companies

The key findings:

• 85% use AI regularly or daily

• 91% have already introduced AI or have concrete plans to do so

• 57% say: this needs to happen this year

• And yet: 45% say they don’t know where to start

Why the System Is the Problem

91% want to adopt AI. Yet almost half don’t know where to start. How?

Once again, the answer isn’t the technology. It’s the system.

Many want to use AI. But the system doesn’t give them what they need:

• No time to learn

• No budget for tools or training

• No approval for what actually works

• No environment where experimentation is allowed

• No guidance on which use cases are worth the effort

Then there’s a second dynamic. People inside organizations adopt new technology at very different speeds:

• 20% are the frontrunners. They try tools, build workflows, bring others along

• 60% wait. They need a clear signal from above before they start

• 20% are the resisters. They reject AI entirely

One executive told me: “More than half our team needs active persuasion. That only works top-down.” The main fear: losing their job.

And that’s exactly why two things happen:

1) People use their own tools.

50% of respondents introduced AI tools on their own in the last 12 months. Often bypassing IT entirely. Personal accounts with company data. Unapproved models. Internal documents in external tools.

There’s even a word for it: shadow AI.

The irony: many companies ban AI tools for data protection reasons. And in doing so, create exactly the risk they were trying to avoid.

2) The organization turns AI into an Office feature.

Where AI is officially permitted, organizations try to shrink it down until it fits existing processes and mental models. Until it feels like a new Office feature.

Instead of rethinking processes, AI gets layered on top.

“We’re papering AI over old, entrenched processes. Without taking the chance to rethink them from scratch with AI.”

Why doesn’t anyone do it differently?

1) Nobody likes sawing off the branch they’re sitting on.

Who willingly introduces a tool that makes them redundant? Or cuts their own management scope?

2) AI isn’t even on the agenda.

No budget, no plan, no priority. Among suppliers, 12% say their company blocks AI entirely.

Nobody Wants Microsoft Copilot

When companies respond to AI, they almost always roll out Microsoft Copilot. That came up in nearly every conversation. Usually with frustrated undertones.

What most people get: a chatbot with no access to company data, no context for their actual work. The Pro license with company data access costs around $30 per user per month. But most companies don’t roll that out broadly. Everything else gets blocked.

Privately, those same people use Claude, ChatGPT, or Gemini. And they all say the same thing: Copilot delivers far worse results.

Even those with the Pro license are frustrated:

“We have the Pro license. And Copilot can’t even handle a simple Excel table comparing 4 quotes. $380 a year. I’d be twice as fast without it.”

Here’s what happens next. Copilot gets rolled out, tried for a few weeks. Many are disappointed. Usage drops off. And the topic is now radioactive internally. For the 60% in the middle, this is the confirmation they were waiting for: “AI just isn’t there yet.”

Some frontrunners keep pushing. Others give up. Others quit. They know what’s possible. They just don’t get the chance to act on it.

And in management? AI is now checked off. Tool introduced. Done.

That’s the real misconception. Rolling out Copilot doesn’t mean introducing AI. It means providing a stripped-down version of ChatGPT. While believing that’s a sufficient response.

Putting a chatbot in Office is a feature update. Not a new way of working.

The Pressure Is Coming from Outside

In every conversation, I asked the same question: what happens if your company doesn’t keep up with AI?

The answers:

• “Revenue in our core business will fall off a cliff.”

• “In 2 years we won’t have market-viable prices anymore.”

• “Without AI, we’re out of business in a few years.”

Almost everyone agrees.

The good news: There’s no awareness problem.

Even better: There’s probably still time. Organizations are slow by nature. Technological change always moves faster than adoption in large companies. That was true for the internet, mobile, and cloud.

If AI follows the same pattern, there’s still time to adapt.

The bad news: AI might not follow that pattern.

The pressure is coming from 2 directions:

1) The barriers to entry for new competitors are falling.

With AI, it’s suddenly much cheaper to:

bring a product to market

copy an existing business model

attack an entire industry from the outside

AI-native startups don’t need to transform. They build with AI from day one. What takes 100+ people in an established organization, they do with a handful of people and AI agents.

2) Early movers build a lead that’s nearly impossible to make up.

AI users achieve the same results with a fraction of the resources. Start early, develop faster, sell cheaper. That gap is almost impossible to close later.

This is where competitors from China and the US have a potential advantage. Their organizations are younger. More digitally native. And if you can’t keep up, you’re out. That pressure forces faster change. And that’s how the lead gets built.

My Take

What’s forming right now is a disconnect. Between what’s possible with AI on the outside. And what’s actually happening inside these organizations. And it keeps widening.

The established players get hit hardest. Their size makes them slow. We know this.

One example: German OEMs are currently offshoring large parts of software development to India. Mercedes is in the middle of it. The decision came from a time when software developers were scarce and expensive.

But that world is shifting. AI is changing exactly this kind of work.

Code is becoming a commodity. AI handles it. What companies actually need are veterans who understand both product and code. A small number of highly skilled people working close to the core organization. Not offshore.

Yet the offshoring continues. Because organizations today are acting on decisions from a world that no longer exists. And the larger the organization, the longer it takes to correct course.

Where is this heading? Toward companies that run with a fraction of today’s knowledge workers. The successful companies of the future will likely consist almost entirely of frontrunners.

But what shocked me most in these conversations: there are companies in Germany that still haven’t prioritized AI. No budget. No signal from the top.

To me, that’s leadership failure.

AI isn’t the next tool. AI changes the operating system of a company.

If you don’t treat this as a leadership priority, you’re driving your company off a cliff.

So back to the original question: where does the German auto industry stand on AI?

The honest answer from these conversations: behind.

Some companies won’t survive this.

But it doesn’t have to end that way.

Companies can course-correct. Just not with the standard playbook.

And here’s the good news:

The answer is already inside the company.

It’s the 20%. The frontrunners.

They’ve already started. With their own tools. Their own projects. At their own expense.

These are the most valuable people a company can have right now. Don’t slow them down. Give them everything they need to move fast.

That’s the bet. Not on the technology. On the people already using it.

🔗gh | en | mo

That’s all for today.

Feel free to reply to this email with your thoughts.

Until next week,
Philipp

PS: If you find value here, share it with someone who should read it too.

Want to reach European automotive decision makers?

I help global B2B companies connect with 80,000+ automotive decision makers in Germany.

Learn how →

What do car buyers actually want from their next car?

Berylls just surveyed 8,000 car buyers across 11 countries for their new study, CONFIGURED: What will car buyers drive next?

I got early access to the data and spoke with the authors, Theresa Stütz and Jonas Wagner. Today’s newsletter is my analysis from a German auto industry perspective.

Download the study for free

Berylls by AlixPartners had no influence on the content of this newsletter.

Welcome to Issue #113 of The German Autopreneur.

No label in the auto industry means quality like Made in Germany. Nothing commands more trust worldwide. But with EVs, that promise is breaking.

Berylls by AlixPartners surveyed 8,000 car buyers in 11 countries for their new CONFIGURED study. I got early access and spoke with the authors.

At first glance, the results look good for German manufacturers. Look closer, and there’s a problem. Owners of German EVs are far less satisfied than owners of Chinese EVs. The brand delivers. The product doesn’t.

Today we’ll look at why Made in Germany no longer delivers on EVs. And why this follows a pattern that has destroyed entire industries before.

No Country Disappoints More EV Customers

Berylls asked the question differently than you’d expect.

Not: Which car brands do you prefer? But: Cars from which country would you explicitly avoid?

Only 12% of respondents globally say a German car is off the table. That’s the lowest rejection rate of any country. American brands hit 25%. Chinese brands 44%.

Made in Germany is the industry’s strongest label. Stronger than Japan. Stronger than the US.

But that’s for combustion cars. Not EVs.

23% of German EV drivers wouldn’t buy German again. Among Chinese EV drivers, only 13%.

No country has more buyer trust globally. And no country has more disappointed EV customers.

Repurchase rate is the hardest metric. It doesn’t measure image. It measures experience. And the experience says: With EVs, the product doesn’t deliver what the brand promises.

Theresa Stütz is one of the study’s authors. She says German EVs don’t meet Made in Germany expectations. Not just on quality. On trust in the tech, too.

And it’s getting worse. The next generation of Chinese buyers knows German brands mainly as their parents’ cars. The average new car buyer there is 35. For this generation, Li Auto, Huawei, or Xiaomi mean innovation. Not Mercedes and BMW.

German manufacturers are losing customers on two fronts. Customers who try a German EV are disappointed. And the next generation doesn’t have German brands on their radar at all.

Where German EVs Actually Fail

The obvious explanation: They’re too expensive. Customers switch to cheaper alternatives.

The study proves otherwise.

Globally, 37% cite price as the biggest barrier to buying an EV. In China, it’s 8%. Price isn’t the problem.

China isn’t a budget market. China is a quality market. Or as Jonas Wagner from Berylls puts it: “China is high tech and high quality.”

Globally, 77% of EV buyers say material quality matters to them. For combustion buyers, it’s 63%.

German manufacturers aren’t competing against cheap cars. They’re competing against cars that offer more at the same quality level. More range. Better software. A better digital experience.

German Automakers Are Losing Autonomous Driving Before It Starts

1 in 4 Chinese buyers expects Level 4 or 5 autonomous driving in their next car. In Germany and the US, it’s 6%. And this is about a technology no private vehicle delivers today.

But the real difference isn’t demand. It’s motivation.

69% of Chinese customers want autonomous driving to reduce daily stress. There, the technology means freedom.

Western customers see autonomous driving mainly as a safety feature. Nice to have. But not a purchase driver. Only 10% of Germans would pay extra for it. In the US, 7%.

In China, it’s a purchase driver. Only 1% of Chinese buyers have no interest in autonomous driving. Globally, it’s 17%.

The dilemma: Where autonomous driving matters most, customers already buy from competitors. Where German manufacturers are still strong, almost nobody wants to pay for it.

Made in Germany was never just about quality. It meant technology leadership. The best engines. The latest innovations. That justified the premium.

But today, different things define a modern car. Electric drivetrains. Software. Autonomous driving. And German manufacturers? Others are leading in all three.

My Take

There’s a book from the 90s. The Innovator’s Dilemma by Clayton Christensen. The idea is simple:

Successful companies don’t fail because they make bad decisions. They fail because they do the right thing. They listen to their customers. Optimize what works.

And while they do that, someone else builds something new. A product that’s worse at first. In everything that mattered before. But it can do something the old product can’t. And suddenly the standards shift.

When Steve Jobs introduced the iPhone in 2007, he didn’t say: This is a better phone. He said: “An iPod, a phone, and an internet communicator.” He invented a new product category.

That’s exactly what happened in automotive. German manufacturers built the world’s best combustion cars. For decades. Better engines. Better build quality. Better chassis. But the car always remained a car. The way it had always been.

Then new players arrived. First from America. Then from China. They didn’t improve the car. They rethought it.

German manufacturers kept building better combustion cars. The Innovator’s Dilemma.

Eventually they reacted. But by then, the others were generations ahead. The result: The first generation of German EVs disappointed customers. The data proves it.

Now they know they’re no longer technology leaders. So they invest billions to catch up. But those billions have to come from somewhere.

That’s exactly the downward spiral:

1. The technology is no longer competitive

2. Customers are disappointed

3. So they invest billions to catch up

4. They cut corners on quality and materials to fund it. On the very thing that makes Made in Germany Made in Germany

5. Even more customers are disappointed

They end up losing on both sides. Behind on technology. No longer Made in Germany on quality.

But it’s not over. Made in Germany still commands the highest trust globally. The data showed that.

And the second generation of German EVs is arriving now. In a different technological league than the first. These are the make-or-break models. They’ll decide what Made in Germany is worth 10 years from now.

PS: Want to see the full data behind today’s analysis? Berylls’ CONFIGURED study surveyed 8,000 car buyers across 11 countries.

👉 Download the study for free

That’s all for today.

Until next week,

Philipp

PS: If you find value here, share it with someone who should read it too.

Want to reach European automotive decision makers?

I help global B2B companies connect with 80,000+ automotive decision makers in Germany.

Learn how we can work together →

Last year, everyone here in Germany felt it: BYD is just taking over.

4.6 million cars sold. More than BMW and Mercedes combined. Tesla overtaken. It felt like they were steamrolling every market at once.

Now the 2025 numbers are in. And the first data for 2026. They tell a different story. Profit down 19%. Strip out subsidies and it’s closer to 50%. In China, BYD has dropped from first to fourth.

So which is it? Is BYD still on the rise? Or is the shooting star crashing?

The answer is neither. And what’s actually happening affects European automakers more directly than most people realize.

What the Numbers Actually Say

• Sales: 4.6 million vehicles (+7.7%)

• Revenue: +3.5% (weakest growth in 6 years)

• Net profit: 32.6 billion yuan (approx. $4.5 billion), -19%

• Q4 profit: -38%

• Auto gross margin: 20.5% (down from 22.3%)

• Net margin: 4.1% (down from 5.2%)

• State subsidies: 12.47 billion yuan (approx. $1.7 billion) = 38.2% of net profit (2024: 25.9%)

• Profit without subsidies: approx. 20.1 billion yuan / $2.8 billion (-50%)

+7.7% more cars, but only +3.5% more revenue. BYD is selling more vehicles at lower prices.

The profit decline accelerated through 2025. In Q1, profit nearly doubled. By Q3: -33%. By Q4: -38%.

BYD founder Wang Chuanfu says competition has peaked. China is in a “brutal elimination phase.”

Why BYD Dropped to Fourth in China

In early 2026, BYD sits behind VW, Geely, and Toyota. Sales have been declining for 7 months. In Q1 2026 alone: -30% year over year. Market share has collapsed from 33% to 24.6% in a single year.

Three factors are hitting BYD at the same time:

1) The price war:

Since mid-2025, all major manufacturers have been cutting prices at once. BYD’s margins have fallen faster than its competitors’. The reason: BYD is most exposed in the volume segment. That’s exactly where the price war is fiercest. This triggered the profit collapse in the second half of 2025.

2) New competitors:

This is the biggest irony of the whole story. BYD spent years as the newcomer rolling over incumbents. Now they are the incumbent. And the next wave is rolling over them.

Smartphone maker Xiaomi collected nearly 290,000 pre-orders for the YU7 in a single hour in June 2025. Huawei’s automotive alliance HIMA is rapidly gaining EV market share. These competitors come from the tech sector. They bring their own ecosystems, software mindset, and brand loyalty.

BYD comes from the battery business. Software was never their home turf. But software is where China’s market war is being won right now.

3) The policy reset starting in 2026:

This is probably the most important factor. China changed the rules for EV buyers. Two changes at once.

First, the trade-in bonus. Until now, the government paid anyone who scrapped an old car and bought a new EV a flat rate of roughly $2,800. No matter whether the new car cost $10,000 or $45,000. This meant cheap cars benefited the most. That’s BYD’s core business.

Now, the bonus is 12% of the car’s price. For BYD’s entry model, the Seagull (around $10,000), that means roughly $1,350 instead of $2,800. More expensive models now benefit more than before.

Second, the purchase tax. In China, car buyers pay a 10% tax on the purchase price. EV buyers were fully exempt for over 10 years. Since 2026, they pay 5%. Still half of what combustion buyers pay. But after a decade at zero, it’s a real increase.

Both changes hit BYD from two sides at once. BYD only makes EVs and plug-in hybrids. Every subsidy cut and every new tax hits the entire business. Geely, by contrast, still sells around 146,000 combustion cars per month that are unaffected. And BYD is most exposed in the affordable volume segment. Exactly where the trade-in bonus change hurts most.

BYD’s Subsidies Help in China. And Hurt in Europe

BYD is trapped.

In China, BYD needs state subsidies to compete on price. In 2025 alone, BYD received around $1.7 billion in subsidies. Nearly 40% of profit. Without that support, profit wouldn’t have fallen 19%. It would have fallen around 50%.

In Europe, the EU uses exactly these subsidies to justify tariffs. BYD pays 17% in penalty tariffs on every imported car, plus 10% standard import duty. 27% total. The justification: unfair state support. The $1.7 billion in BYD’s annual report is all the proof the EU needs.

The irony: the subsidies help BYD survive in China’s price war. And make its exports to Europe more expensive at the same time. The more subsidies, the stronger the argument for European tariffs.

Wang Chuanfu’s response: BYD paid around $7.5 billion in taxes in China in 2025. Net, they contributed $5.7 billion more than they received back in subsidies.

Fair point. But it doesn’t change the fact that nearly 40% of profit came from state support. And that’s the basis for EU tariffs.

Under this pressure, what does BYD do? Flee China.

The Flight to Europe

1.05 million exports in 2025. Up 150% year over year. In Europe, BYD overtook Tesla on new registrations in early 2026.

The math is straightforward. BYD earns around $700 per car in China. In export markets, it’s around $2,800. One export car generates as much margin as 4 domestic cars.

That’s why BYD raised its 2026 export target from 1.3 to 1.5 million vehicles. In February, over 50% of BYD’s sales came from exports for the first time.

The logic is simple: BYD goes where the money is.

And they’re not stopping at exports. BYD is building a global production network at speed. Thailand and Uzbekistan are already producing. Plants are under construction in Brazil, Indonesia, and Turkey. And then there’s Europe.

The plant in Szeged, Hungary, has already started pilot production. Full-scale production begins in Q2 2026. Capacity: up to 300,000 vehicles per year. Built in the EU. The 27% tariffs? Gone.

The pattern isn’t new. In the 1980s, Toyota did exactly this. The Japanese home market was under pressure. Toyota flooded the US with affordable exports. Then built local factories. And never left. The exporter became the world’s largest automaker.

BYD is running the same playbook. Just faster. China Speed. Toyota needed over 10 years. BYD is building a global production network in 18 months.

My Take

Both narratives about BYD are wrong.

“BYD is unstoppable” ignores: profit -19%, stripped of subsidies -50%, crashed to fourth in China, growing dependence on state support.

“BYD is crashing” ignores: +150% exports, world’s largest EV manufacturer, factories on 3 continents, market leader in Thailand, Singapore, and Brazil.

To understand what’s actually happening, you need to know China’s industrial playbook. China ran the same strategy in solar. In batteries. In steel.

Today, over 80% of solar panels sold in Europe come from China. The European solar industry has practically disappeared. That took less than 10 years. With EVs, China is running the same playbook:

1. Pour money into an industry. Hundreds of companies emerge

2. Brutal domestic competition. Too many players, too little margin. A price war to the death

3. Pull back subsidies. Survival of the fittest. The weak die

4. The survivors are globally unbeatable. Because they survived the world’s toughest competition. With the lowest costs. The most efficient processes

That’s what we’re watching with EVs right now. Around 50 EV manufacturers are fighting for market share in China. Only a handful are profitable. Now subsidies are being cut. And the price war is escalating.

BYD isn’t crashing. BYD is doing exactly what China’s system designed it to do.

Soon, the first BYDs will roll off the line in Hungary. No tariffs. European production. BYD is no longer an import problem. It’s a local competitor.

So is BYD rising or crashing? Wrong question. BYD is transforming. From local champion to global powerhouse. The rise was never the real threat to European automakers. What’s about to hit world markets is.

🔗 bl | re | wsj | ev | cnp | el

That’s all for today.

Feel free to reply to this email with your thoughts.

Until next week,
Philipp

PS: If you find value here, share it with someone who should read it too.

Want to reach European automotive decision makers?

I help global B2B companies connect with 80,000+ automotive decision makers in Germany.

Learn how →

You know your product. But do you know your buyers?

You sell software, consulting, or technology to German and European OEMs and suppliers. You know how hard it is to get real insights. What keeps decision-makers in Europe’s largest automotive market up at night? What are they planning internally?

Last week, hundreds of automotive professionals took part in my AI survey. From team leads to board members. Real data. Straight from your target audience.

I do this for partners too. You choose the topic. I ask the questions. Directly to 80,000 German automotive professionals.

How partnerships work

Welcome to Issue #111 of The German Autopreneur.

Over the past few weeks, I’ve looked at the annual results from Mercedes and VW. Today it’s BMW’s turn. And upfront: this is by far the most boring story.

No drama. No radical pivots. No shocking numbers.

But that’s exactly what makes it interesting.

2025 was the worst year for German automakers since 2020. Net profits collapsed across the board:

• Mercedes: -49%

• VW: -44%

And then there’s BMW at -3%.

That looks like BMW won. But they didn’t.

BMW just got through 2025 better than the others. And the more interesting question is: why?

Today I’ll look at why BMW’s numbers look better than they actually are. What really helped BMW in 2025. And why BMW is taking on more risk in 2026.

BMW’s Key Numbers for 2025

• Revenue: $153.9 billion (-6.3%)

• Net profit: $8.6 billion (-3%)

• EBIT margin, automotive segment: 5.3%

• Sales volume: 2.46 million vehicles (+0.5%)

• EVs: 642,000 units (+8.3%), of which 442,000 fully electric

Sales by region:

• Europe: +7.3%

• US: +5.0%

• China: -12.5%

Unlike VW and Mercedes, BMW cut costs in 2025. And sold more cars.

What the Numbers Don’t Show

2025 looks better than it is. The reason is 2024.

Net profits had already collapsed in 2024:

• Mercedes: -28%

• VW: -31%

• BMW: -37%

BMW fell hardest in 2024. The reason: a faulty braking system from Continental forced BMW to recall 1.5 million vehicles. In Q3 alone, that cost around $1.15 billion.

That skews the comparison. BMW’s 2025 looks good because 2024 was already bad.

So is BMW structurally in better shape? Yes. But not for the reasons most people assume.

BMW’s 3 Structural Advantages

All three kicked in at the same time in 2025.

1. Platform flexibility

BMW builds combustion, hybrid, and electric cars on the same production line. That sounds like a footnote. It isn’t.

VW and Mercedes went a different way. They produce separately. Put simply: one plant for combustion, one for EVs. That’s more efficient, but only if you can keep the lines running at capacity. And that requires you to predict almost exactly how many EVs will sell in which region. Then ramp production in sync.

And in today’s market, that’s nearly impossible to time.

And in 2025, that got even harder. Trump changed the rules overnight, and billions in automaker investments became worthless.

BMW could work around it. When fewer EVs are ordered, they simply build more combustion cars on the same line.

2. BMW was America-first before Trump

BMW is the largest automotive exporter from the US, ahead of Ford. The BMW plant in Spartanburg employs 11,000 people. It produces 1,500 cars a day. The plant has been running since 1994. That’s where the SUV lineup is built, from the X3 to the X7.

BMW was America-first decades before Donald Trump. When high import tariffs hit in 2025, Trump’s message was clear: build in America. BMW had already been doing that for 30 years.

3. Cost management

BMW cut $2.9 billion in costs in 2025. Without the headlines. Without mass layoffs or plant closure debates.

Lower development costs, reduced material costs, leaner administration. That’s where the $2.9 billion came from. The most boring number in this story. And the most important one.

These 3 advantages protected BMW in 2025. All at once, at the right time.

But was this a deliberate strategy?

Every automaker faces the same question right now: go all-in on EVs, or keep building combustion cars alongside? BMW’s answer is flexibility. CEO Oliver Zipse made “Power of Choice” his mantra: all powertrains, all markets.

It sounds bold. Even principled. But BMW had no better read on the market than anyone else. They just sold the story better.

And BMW isn’t as committed to keeping all options open as it sounds. Their future strategy is a clear bet on EVs. And it has a name.

The Neue Klasse

In 1959, BMW was on the verge of bankruptcy. Daimler wanted to acquire it. A guy named Herbert Quandt rescued the company with a private investment. His family still controls BMW today.

Two years later, BMW unveiled the 1500 at the IAA. Germany’s flagship auto show. It was the first model of the Neue Klasse. That car became the foundation for everything BMW is today.

65 years later, the answer is Neue Klasse again. This time, fully electric.

Mercedes tried going all-in on EVs and walked it back. BMW chose a different path. The Neue Klasse runs alongside the existing combustion platform, not instead of it.

The old flexible combustion architecture continues for another 8-10 years. But by 2030, more than 50% of all BMWs sold should be fully electric.

The first models on the new platform: the iX3 and a new i3.

Here’s the catch. BMW’s advantage in 2025 was that everything ran on one line: all powertrains, maximum flexibility. That’s over now. The Neue Klasse plants build EVs only. BMW is moving toward the same situation as VW and Mercedes: two parallel worlds, double the infrastructure.

And BMW is tying its future to this platform. If the Neue Klasse doesn’t work, BMW has a serious problem. No matter how well the combustion cars still sell.

Where BMW Actually Stands

The disruption reshaping the auto industry hits BMW just as hard as everyone else. Software, AI, autonomous driving, cost pressure from new competitors. BMW has no structural advantage over Mercedes or VW on any of these.

In Q4 2025, the EBIT margin was just 3.7%. BMW’s own forecast for 2026: 4-6%.

In China, BMW faces the same problems as the rest. In the last 2 years, BMW has lost nearly 200,000 units of annual volume. The trend is still pointing down.

And the US advantage? More than half of the cars produced in Spartanburg are exported. If the trade war escalates, that advantage becomes a liability.

In May, Milan Nedeljkovic takes over as the new CEO. 33 years at the company. He won’t reinvent BMW. His job is to deliver what his predecessor promised.

My Take

Mercedes has changed course 4 times in 18 months. VW is fighting for its survival. And BMW? Just keeps going like nothing happened.

That’s boring. But it describes BMW as a company pretty well.

But did BMW actually have the better strategy? No.

This wasn’t foresight. It was a bet. A more risk-averse one. VW and Mercedes bet on 2 platforms: one for combustion, one for EVs. BMW bet on one platform for everything.

Not necessarily the smarter bet. But in a year where everything changed, keeping your options open paid off.

Flexibility is a crisis strategy. It works as long as the world stays volatile. As long as no one knows which technology wins where and when. As long as political decisions can change everything overnight. In that world, optionality isn’t a weakness. It’s a capability.

BMW’s approach wasn’t necessarily cheaper. A single platform that has to handle combustion engines, hybrids, and EVs at the same time means enormous complexity. And with it, cost.

Why could BMW pull it off? At VW, the German state of Lower Saxony holds 20% of shares. Politics literally has a seat at the table. At Mercedes, major shareholders from China and Kuwait shape the agenda. BMW is backed by the Quandt family. They’ve held half the shares for over 60 years. Of the German automakers, BMW can plan furthest ahead. In generations, not quarters. That is BMW’s real structural advantage.

2025 was a year where the best plan was having no plan. BMW benefited from that. The Neue Klasse is the opposite: a clear bet. And clear bets can be lost.

🔗 bmw-pr | el1 | hb-oem | re1 | hb1 | cio1

That’s all for today.

Until next week,
Philipp

PS: If you find value here, share it with someone who should read it too.

Want to reach European automotive decision makers?

I help global B2B companies connect with 80,000+ automotive decision makers in Germany.

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You sell software, tech, or consulting to OEMs and suppliers? Then you know the problem. You can’t reach the right people.

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Welcome to Issue #110 of The German Autopreneur.

German automakers are scrambling to find skilled workers. But: Last year, the industry cut 50,000 jobs.

How do those two things go together?

The automotive industry faces its biggest transformation ever. Powertrains, software, autonomous driving. Everything's changing at once. And now AI is here.

Everyone's talking about it. But most departments haven't changed much yet. Something's coming. But when? And for whom?

A new study analyzed 2 million real AI interactions. Not surveys. Not forecasts. Actual usage data. The result flips a common assumption: AI doesn't automate simple jobs first. It automates the most demanding ones.

Today we'll look at what the data shows. Which jobs and departments in automotive are next. And why most people aren't feeling the real impact yet.

What the Data Shows

The study didn't ask what AI can theoretically do. It measured what people actually use AI for.

The pattern: AI replaces higher-skilled tasks first. Not simple ones.

4 examples:

• Travel Agents: Complex trip planning disappears. Ticket sales remain

• Technical Writers: Analysis and review disappear. Sketching and on-site observation remain

• Teachers: Grading and research disappear. In-person teaching remains

• Property Managers: Bookkeeping disappears. Negotiations remain

AI replaces knowledge work first. What stays: Everything requiring personal contact and relationships.

Here's what matters. AI doesn't need to replace the entire job. Every position exists because of 1 or 2 core tasks. When AI handles exactly those, the job is gone.

But how much is actually in use?

For each job category, 2 numbers. How much AI could theoretically handle. And how much is actually deployed today:

• Computer & Math: 96% possible. 32% used

• Business & Finance: 94% possible. 28% used

• Management: 92% possible. 25% used

The pattern is the same everywhere. 60-80% of all office tasks are theoretically automatable. Companies currently use AI for 10-20%.

The gap is massive. But it's closing fast. AI is spreading 10x faster than the internet or smartphones did.

What AI could do vs. what it does (Anthropic)

What This Means for Automotive

Everyone pictures robots replacing factory workers. The data shows the opposite. Production, assembly, logistics, and service shops are barely affected for now.

The disruption is happening in white-collar work.

Where it's already visible: IT and software development use AI intensively.

Where it's coming next:

• Simulation and calculation

• Finance

• Legal and compliance

• Strategy planning

AI could handle a lot here. But doesn't yet.

And even where AI doesn't fully replace the job, it transforms it. There's already a term for this. De-skilling. AI handles the demanding part. The analysis. The strategy. The evaluation. What remains: Review results and approve them. The job still exists. But it's different.

For demanding tasks, AI speeds things up by a factor of 12. The more complex the task, the bigger the leverage. And these are exactly the tasks companies pay the most for.

Automotive AI Exposure Map: Which departments are affected?

Who's Still Hiring Juniors?

AI doesn't just change which tasks disappear. It changes who companies hire at all.

With AI, juniors are 26-39% more productive. Seniors only 8-13%. Yet companies hire fewer and fewer juniors.

In European tech companies, junior hiring collapsed by 73% within one year. Not because there are no applicants. But because the positions are vanishing.

The reason: 1 senior with AI can now handle what used to require an entire team. Including the juniors.

So companies aren't just cutting positions. They're replacing old roles with new ones. Especially those who can work with AI.

Which raises a question. If nobody hires entry-level people anymore, where do tomorrow's experts come from?

What We're Not Seeing

So much for the data. But reality is more complicated than headlines.

The headlines say AI destroys jobs. AI replaces people. We're not there yet.

59% of HR leaders admit they highlight AI as a reason for layoffs because it plays better with investors. The real reasons are usually financial: costs, demand, restructuring.

Nearly 90% of surveyed executives say AI had no impact on employment over the past 3 years. Of 1.2 million jobs cut in the US in 2025, only 4.5% were actually AI-related.

There's now a term for it. AI-washing. Companies use AI to explain job cuts that have other causes.

That's the real danger. The narrative is everywhere: AI destroys jobs. But it's not really happening yet. And when the real impact arrives, nobody takes it seriously anymore.

My Take

At Mercedes, we built strategy decks for the board. Entire teams. Weeks of work. For one deck. Today, one person with AI can deliver that in an afternoon. These are exactly the jobs AI is changing now.

And we know this pattern. Digital transformation was the same. Digitize processes, connect data, break down silos. German automakers have known for years this is necessary. And still struggle with it today. Too many entrenched structures. Too many people protecting the status quo. Too little appetite for change.

I'm afraid AI will follow the same path. AI targets exactly where resistance is strongest. It affects the people with the most influence first. And they'll slow it down. Because nobody likes introducing the tool that makes them obsolete.

And that repeats another pattern. Newcomers don't have this problem. Young companies build with AI from day one. Fewer people, faster decisions, no legacy structures. We know this from EVs and software. When you don't need to transform an organization, you move faster.

The problem: AI widens the gap between the fast and the slow. For German automakers, that's an additional risk. On top of everything else already happening.

Jeff Bezos just put $6.2 billion into a fund. It targets industrial companies before AI displaces them. Automotive is explicitly included. His bet: These companies have substance. But won't make the AI transformation alone. So he's coming from outside to force the change.

But the data shows something else too.

The industry seeks skilled workers while cutting jobs. Both are true. Because tasks are changing faster than the people doing them. The good news: The deeper your expertise, the more AI helps. Deep domain experts won't be replaced by AI. They get better. German automakers have plenty of those.

But that only becomes an advantage if these people actually use AI. Not on the side. But at the core of their work. The gap between what's possible and what's used is closing. Faster than any technology before. The question isn't whether AI will change these jobs. But whether we move fast enough.

🔗 anth | wsj | bl | nyt | li

That's all for today.

Feel free to reply to this email with your thoughts.

Until next week,
Philipp

PS: If you find value here, share it with someone who should read it too.

Want to reach European automotive decision makers?

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Learn how we can work together →

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In an interview with Jonas Wagner from Berylls by AlixPartners, he explains exactly what he changed.

• How a unified KPI set makes performance across 25 countries manageable.

• Why BMW had to restructure its own organization to keep pace with its own agency.

• Where BMW already uses AI in marketing. And what it delivers.

👉 Watch the interview on YouTube now

Welcome to Issue #109 of The German Autopreneur.

VW reported earnings last week. Profits more than halved. Revenue stayed flat. So it's not about demand. It's about costs.

Operating margin: 2.8%. The last time it was this low? Dieselgate. Except now there's no scandal.

50,000 German jobs gone by 2030.

But we all know the numbers by now. What's more interesting is what VW CEO Oliver Blume said about them:

"The business model of past decades no longer works. Not for Volkswagen. Not for the German automotive industry. Not for Germany as a whole."

That's either a brutally honest diagnosis. Or Blume is turning a VW problem into a Germany problem.

Today I'm figuring out which one it is.

What was this business model? Why did it break? What's VW doing about it? And why that won't save Germany.

The Key Numbers

Group

• Revenue: €321.9 billion (-0.8%)

• Sales volume: 8.98 million vehicles (-0.5%)

• Operating profit: €8.9 billion (-53%)

• Operating margin: 2.8% (prior year: 5.9%)

• One-time charges: ~€9 billion (Porsche ~€5B, tariffs ~€3B, restructuring ~€1B)

Porsche & Audi

• Porsche operating profit: €90 million (prior year: €5.3 billion)

• Audi operating profit: -13.6%

• Porsche sales in China: -26%

So much for the numbers. Now for the question behind them.

What Was This Business Model?

The German business model in automotive worked like this for decades: Build highly complex machines at expensive locations and sell them worldwide at a premium.

A combustion engine has over 2,000 moving parts. Transmission, injection, exhaust treatment. This complexity was the moat. Master it, and you could charge more. Germany mastered it better than anyone.

Add cheap energy. Russian gas kept electricity prices low. Germany had high wages but stayed competitive overall.

Then China. For decades, THE growth market. Economic boom, rising middle class, more cars on the road every year. And no strong domestic auto industry. The jackpot for German automakers.

VW held over 40% market share there at times. The joint ventures printed billions.

These profits didn't just fund European investments. They kept the entire apparatus running. Overhead, bureaucracy, inefficient structures in Wolfsburg.

The formula: Complexity as moat × cheap energy × China profits = Made in Germany.

This formula worked for decades. Until all 3 variables collapsed at once.

Why Germany's Formula No Longer Works

1) The moat is dissolving An electric motor has about 20 moving parts. No transmission. No injection. No exhaust treatment. The complexity German automakers mastered better than anyone? Now irrelevant. Value creation is shifting to software and batteries.

2) The energy foundation is gone Russian gas is gone. Industrial electricity in Germany costs roughly twice as much as in China.

3) China isn't coming back VW was once number 1 in China. Today, number 3. Sales only fell 6% in 2025. But profit from joint ventures nearly halved: from €1.7 billion to €0.96 billion. At the peak, €5 billion per year from China alone. For 2026, VW expects only €200 to 600 million.

China now has its own auto industry. One that barely existed 10 years ago. Local manufacturers like BYD and Geely understand the Chinese market better, build faster and cheaper.

For VW, the China curve pointed up for decades. Now it points down. And there's no bottom in sight.

How Did China Pull This Off?

This wasn't an accident. China's government recognized EVs as a strategic opportunity. The starting advantage: the world's largest car market as home turf. Demand was there. What was missing was domestic supply. So they built it. Around $230 billion in government subsidies flowed into the entire value chain. From raw materials through battery production to finished cars.

Europe reacted too. Just differently. Instead of building supply, they subsidized consumption. Germany offered €9,000 purchase incentives for EVs. When those ended in late 2023, the market collapsed. The irony: these incentives helped finance exactly the industry China was building. Because batteries in European EVs nearly all come from China.

Europe promoted a market. China built an industry.

This also explains why tariffs won't solve the problem. Tariffs protect existing structures. When the existing structure is the problem, you're protecting the problem.

Is Blume Right?

Back to Oliver Blume. He says this isn't a VW problem. Is that true?

The evidence supports it:

• Mercedes: operating profit -57% in 2025

• BMW: -11.5%

• German automotive has cut over 100,000 jobs since 2019

So it's not just VW. But Toyota achieved 8.6% operating margin in the same environment. The Hyundai/Kia Group: 6.8%.

What separates German automakers from Toyota comes down to 2 things:

1. Disproportionate dependence on China

2. Strategic back-and-forth

And we see this at VW too:

• First all-in on EVs. Then back to combustion

• Build software ourselves with CARIAD. Then buy it instead

• Develop platforms ourselves. Then partner with China and the US

So both are true. The formula no longer works. But VW also has a VW problem.

Can the Business Model Work Again?

Yes. But not with the old formula.

VW sold almost as many cars in 2025 as the prior year. 8.98 million, only -0.5%. In Europe, up 5%. In South America, up 10%.

And the powertrain mix tells a story that often gets lost. VW sold roughly 55% more pure EVs in 2025 than the year before. EV market share in Europe: 27%. More than combustion.

This isn't a dying company. This is an expensive company.

But the most important change: VW fundamentally flipped its strategy. Away from "do everything ourselves." Toward partnerships. With Rivian in the US. And with Xpeng in China.

VW is moving development away from Germany. Into regional hubs. Cheaper, faster, and closer to customers.

So VW is finding its answer.

But the answer is: somewhere else. The VW of the future isn't a German company anymore. It's a company with German roots.

But then what about the 'German business model' Blume talked about?

My Take

Oliver Blume built the perfect narrative. VW isn't the problem. Germany is the problem. And he's partly right. But he's leaving out the punchline. VW is solving its own problem. And leaving Germany to deal with its own.

There's no answer for that yet. Right now everyone's pointing at everyone else.

Automakers point at politics: expensive electricity, too much bureaucracy, no stable framework. Politicians point at companies: slept through transformation, clung too long to combustion. Unions point at management. And all of them point at China and Trump.

Every accusation probably has some truth to it. But that's exactly the problem. While everyone's busy pointing fingers, no one's working on an answer.

In the 1970s, British Leyland was the UK's biggest automaker. Dozens of brands under one roof: Jaguar, Rover, MG, Land Rover, Mini. Basically the VW of Britain.

But there were structural problems. Costs too high. Too much bureaucracy. Too little innovation. Instead of acting together, management, unions, and government blocked each other for years.

And while they fought, customers simply bought other cars. From Japan. And from Germany. Today, Britain has no mass-market manufacturer left.

Germany isn't there yet. But the beginning looks similar.

VW found an answer. But not for Germany.

Which means the last hope is gone. Legacy automakers won't reinvent Germany's business model.

That takes new players. Companies that don't exist yet. But for them to emerge, the whole system needs to work. Industry, politics, society. Together.

China keeps proving it can be done. But it doesn't happen on its own. It has to be orchestrated.

If it doesn't, companies will figure it out alone. By leaving. Just like VW is doing right now.

The question isn't whether Germany's business model can still work. The question is whether anyone will build a new one.

🔗 re | re | hb | cnbc | ft | hei

That's all for today.

Until next week,
Philipp

PS: If you find value here, share it with someone who should read it too.

Want to reach European automotive decision makers?

I help global B2B companies connect with 80,000+ automotive decision makers in Germany.

Learn how we can work together →