Cooperation with China needed to achieve Germany’s 2030 EV target – analysis

Germany’s goal of having 15 million electric cars on roads by 2030 could be missed by up to 6 million cars without cooperation with China and improved regulations and incentives, said transport policy think tank Agora Verkehrswende. An analysis commissioned by the think tank and conducted by consultancy BCG found that a joint effort of domestic policy changes and the inclusion of Chinese carmakers is needed to achieve the target. High tariffs on Chinese imports, on the other hand, would lead to higher prices for customers and negatively impact the competitiveness of German carmakers.

“If you want to achieve climate targets and secure Germany’s position in the automotive industry in the long run, you have to advocate for a fast ramp-up of electric mobility in collaboration with Chinese companies,” said the think tank’s head, Christian Hochfeld. While this might appear paradoxical at first, a faster transformation towards EVs would ultimately lead to greater sovereignty and competitiveness for German producers, Hochfeld argued. “Building up European production chains for batteries makes you less dependent on China’s dominant market position.” Chinese companies that set up shop in Europe according to European rules would create greater value for Europe than relying on imports, he added. “At the same time, this offers an opportunity to catch up on technologies such as batteries through cooperation agreements.” Conversely, introducing high import tariffs, as currently in the EU, or even greater restrictions on Chinese products “would bring risks for German companies that are almost impossible to calculate,” Hochfeld warned. China could help foster the spread of EVs, especially budget vehicles with their small and comparatively cheap electric cars.

Agora Verkehrswende added that more measures are necessary to speed up the adoption of electric vehicles. They highlighted making EVs cheaper and combustion engine cars more expensive, which, for example, could be achieved by changing taxation in accordance with a car’s direct CO2 emissions. The total cost for achieving Germany’s 2030 target is an estimated 45 to 65 billion euros, which, amongst other things, would be needed to fund purchase incentives and the required charging infrastructure.

Industry figures released in July showed that the demand for purely battery-electric vehicles (BEV) dropped significantly in Germany during the first half of 2024. The sector thus is bracing for a gloomy full year as high prices and leasing rates hamper business. The European Commission imposed provisional additional duties on imported Chinese electric cars on 4 July in a bid to protect Europe’s car industry from what it says is unfair competition. According to researchres, Chinese e-car imports could fall by more than 40 percent as a result of the tariffs.