For Germany it’s the end of an era
And as Europe’s biggest economy...
...there are some huge challenges ahead
From its increasingly complex relationship with China...
...to climate change
All eyes will be on how Germany’s new leaders...
...grapple with these issues
But there’s one German industry that reveals a lot...
...about the country’s prospects
Its cars
Traditionally, the car industry here has been very powerful
There have been open doors to German ministries, to the chancellery
Germany’s car industry is a vital part of its economy
With links to government that go back decades
How this world-renowned motor industry...
...navigates the challenges ahead could tell you more than you think...
...about Germany’s future
The curves…
...the precision
It’s cutting-edge engineering like this that has helped place...
...carmakers at the heart of the German economy
And the industry has proved a bellwether...
...for the country’s future prospects too
Since the 70s...
...car exports have risen with Germany’s wealth and influence
Manufacturing is incredibly important in Germany
It represents around 18% of GDP
And of course, the car sector represents a very large part of that
It’s not quite, you know, where the car industry goes...
...Germany goes, but the sector is absolutely crucial...
...to the future of Germany and the future of its industrial model
But that industrial model could be under threat
After over half a century of global dominance...
...German carmakers are now playing catch-up
And it’s not just the car industry that’s losing ground
In 2000...
...seven of the world’s most valuable companies were German...
...but in the past two decades, that number has fallen to just three
How Germany’s carmakers attempt to claw back global market share...
...could be telling for the economy as a whole
Take international relations
Almost half of Germany’s GDP comes from exports
Cars make up the biggest proportion of this
Who Germany sells cars to matters
It can point to alliances or trouble brewing
Since 2016 China has been Germany’s biggest trading partner
In 1998, German trade with China was worth $16bn...
...now it’s worth over $180bn
But there’s a fear that Germany...
...could have become too reliant on the Chinese market
For the past 16 years, Angela Merkel has courted China...
...in the name of trade
It’s an approach that has its risks
Particularly now, we’re in this context of this emerging systemic competition...
...between America and China
At least for some people, there is a worry...
...that putting all of your eggs into the Chinese basket...
...might leave you exposed to some of the ill winds of...
...geopolitics and geoeconomics...
...that might be heading Germany and Europe’s way in the coming years
There is a strong sense that...
...Germany’s China policy is going to have to be recalibrated...
...basically on pretty much every single front
Germany’s new leader will face the same challenge as its car industry
How to keep their biggest trading partner onside…
...without ending up in its pocket
China already leads Germany in one crucial aspect of manufacturing...
...digitalisation
This is not traditionally a country...
...that has been closely associated with digital innovation
It’s going to be a big challenge...
...across a whole range of domains
Look at carmakers, and it’s, you know traditionally...
...engineers have been at the heart of what it is that car manufacturers do...
...making components, fitting them together, making them look beautiful
The digital skillset has traditionally taken a backseat...
...and that’s going to have to change
And it’s not just Germany’s car industry that needs to modernise
Before the pandemic, two-thirds of German businesses...
...said they still regularly used a fax machine
And only one in three German companies...
...have a central digital strategy
Just eight years ago, Angela Merkel became a meme...
...when she referred to the internet as “Neuland”...
...the German for uncharted territory
The next government is probably going to have to be...
...a lot more digitally literate...
...than the ones that Angela Merkel has led for the last 16 years
And it’s going to have to do a hell of a lot more...
...to translate the rhetoric on digitalisation...
...into the reality of fostering genuine change in this country...
...which has been severely lacking for the last couple of decades
But there’s an even greater challenge...
...that could define Germany’s global relevance: climate change
Here, Germany’s car industry is a microcosm...
...for how the country will need to radically shift
Traditional forms of power will need to be replaced
For cars, that means a race to go electric
Oliver Zipse took over as CEO of BMW in 2019
He’s overseeing one of the biggest shifts in the company’s history
A commitment to battery-powered cars
The whole car industry is launching a lot of electric vehicles now...
...and BMW is on the forefront of that
I think we need to speed up our efforts...
...to keep up with the electro-mobility demand
It’s a big market developing
Of course, we want to increase our profitability...
...and with the right set of components, products...
...I think that can be a very solid business foundation
Climate change has forced this shift to a greener future
But it was American, not German engineering that first realised it
An electric car can be the best car in the world
Although an early investor in electric technology...
...BMW has now fallen behind rivals in the e-car market
Other German carmakers were slower still
When it comes to fostering innovation...
...the country is still in second gear
Although disruptive innovation does exist here...
...Germany’s leaders could do more to nurture it
Let’s see the acceleration on it
It's good
Sono Motors is a startup based in Munich
They’re technically carmakers...
...but their approach is light years away from the traditional brands
What we’re doing is we’re producing an electric vehicle...
...that is equipped with solar cells
They’re one of several developers around the world...
...trying to get a solar-powered vehicle to market
Their car, the Sion...
...can share power with the grid and other cars...
...and comes with ridesharing software built in
Their claim is that they’re the only car company...
...that thinks the industry should be selling fewer cars
Their approach could upend the industry...
...and their ethos is emblematic of a new way of German thinking
We see ourselves as a mobility service provider...
...it’s not only about the car...
...it’s about the whole new mobility concept we’re providing
Carsharing, ridesharing, power-sharing, a car itself...
...solar integration, solar technology we sell to others
This whole new approach on how we think...
...mobility should look like in the future
Small companies like Sono have the vision for a greener future
But Germany’s politics may make it hard to realise
One of the challenges I think...
...that you’re going to see in Germany...
...is that the next coalition...
...is probably going to be made up of three different parties...
...that may well have very different ideas about...
...how to manage the climate transition
The sort of consensus-oriented approach...
...that’s deeply ingrained in Germany...
...may not look like it is particularly well suited...
...to manage this extraordinary industrial transition...
...that we’re going to have to bring about in the years ahead
So that’s going to mean a very, very big role...
...for the next chancellor
And as efforts to digitise continue...
...Germany’s new leader should plan for a workforce in need of upskilling
We’re going to have a massive ramp up...
...of jobs in the battery-manufacturing sector
We’re going to have a huge demand for coders...
...digital skills and a concomitant decline...
...in the demand for engineering skills that we’ve seen
And as China’s might grows, Germany will have to be more careful...
...about who it gets into bed with...
One of the things I think, for example, that you’re going to see...
...in the next legislative period is...
...real investment in Europe’s ability...
...to stand on its own two feet to ensure...
...that it is not excessively exposed to the risks...
...that could come from a stepping-up of the strategic competition...
...between America and China
Angela Merkel was careful not to scare voters...
...with talk of transformation
But that’s left Germany’s new leaders with a lot to do
Germany has to do better, right?
We have those very big companies, those very big players here
But they aren’t the disrupter, the driver behind innovation
Disruption comes always from the new and young companies...
...which drive change
German startups rarely grow into tech giants
Without making changes...
...Germany risks losing competitiveness throughout its economy
There’s a nice German word, Zukunftsfähigkeit...
...which is roughly translated as the ability to face the future
A lot of people looking at these challenges...
...are starting to wonder how Zukunftsfähig Germany really is...
...and this really is going to be a big challenge...
...not only for the next chancellor...
...but for the government that he or she is going to lead...
...because a lot of people think...
...that Germany isn’t really ready...
...and that it will need to act quite quickly...
...across a whole range of domains in order to meet these challenges head on
Thanks for watching
To read The Economist’s assesment of Germany’s future after Angela Merkel...
...click the link
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