The market of German electric car suppliers is facing significant jeopardy, involving billions of euros
The automotive industry, with its sales value of 500 billion euros, is considered the most pivotal transformative sector in Germany. Car suppliers contribute one-fifth of this value. However, with the shift towards electric mobility, companies in the industry are encountering substantial challenges.
The challenge of transition is evident among car suppliers in Germany, as exemplified in Stuttgart. The CEO of Mahle, Arnd Franz, presented the company’s future at the Hydrogen Testing Center in mid-July, emphasizing the necessity to invest in electric mobility, even though he does not anticipate profits in the coming years.
German car companies are heading towards an electric transformation in their products
Many automotive supply companies in Germany are facing a dilemma. The transformation of the automotive industry is a massive undertaking, leading to increased costs and pressure on profit margins. This shift could potentially push some car suppliers into losses.
According to the Federal Ministry of Economics, the automotive industry is the most crucial industrial sector in Germany. In 2022, sales from domestic production exceeded 500 billion euros, with suppliers contributing approximately one-fifth of this value.
The President of the German Association of the Automotive Industry (VDA), Hildegard Müller, states:
“Many suppliers must make significant investments in future business areas.”
He also urges for the improvement of conditions in Germany and Europe, emphasizing the importance of achieving success in traditional business as well.
Other experts point out the significance of having strong growth areas in the portfolio and warn about the impact of escalating costs on suppliers. Car suppliers can potentially reduce costs by expanding outside of Europe, but this process might be painful.
Expert Simon Schneurer issues a warning against shifting towards Eastern Europe, emphasizing that “without a high-performance supply industry, there will be no high-performance car industry in Europe.” He believes that the companies still present today have done many things right, ruling out a large wave of bankruptcies in the near future.
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