The figures speak for themselves: the transformation to electromobility is at an impasse in Germany and the EU. In the EU's largest economy and in the European Union, only one in ten newly registered cars is purely battery electric. In the USA, the figure is only one in twenty. Only China is an exception with one in four there. The large gap to the China is the result of a lack of traction and determination on the part of Europeans. While Beijing is investing huge sums of money in the transformation to zero-emission driving, Berlin is prematurely withdrawing from subsidizing electric vehicles.

The major differences in Europe shed light on the state of industrial and regulatory policy in the respective EU member states. While Scandinavia and Benelux are the driving forces behind the conversion, pure e-cars – so-called battery electric vehicles (BEVs) – play virtually no role in Southern and Eastern Europe. Demand in the Old Continent is inconsistent. The economic downturn is dampening buying interest. In Germany, the market share of electric vehicles is falling following the abolition of the environmental bonus.

This is slowing down the electric vehicle strategies of German car manufacturers. In 2023, BEVs accounted for 8% of the Volkswagen brand's total global passenger car sales. At Mercedes-Benz, the figure was almost 12%. BMW came in at almost 15%. Obviously, the premium manufacturers in Stuttgart and Munich are doing better than the volume manufacturer based in Wolfsburg. Buyers in the mass market are more price-sensitive. VW is trying to boost demand for vehicles in its ID model series by offering discounts. However, the discount battle initiated by Tesla in the industry has not yet led to an increase in orders. This is because the falling residual values for used electric cars associated with discounts are holding customers back. The car rental company Sixt banned Tesla vehicles from its fleet due to increased residual value risks and falling demand.

In view of the difficulties, German manufacturers are beginning to rethink. Some of those who were all too eager to embrace the e-transformation are now backtracking. The great euphoria has faded, as Mercedes-Benz CEO Ola Källenius admitted. For BMW & Co., the slowing effects represent a crucial test for their electric strategies. The two premium brands from southern Germany are taking a smarter approach than the group from Lower Saxony. BMW and Mercedes-Benz are pursuing the concept of producing both e-cars and hybrids as well as conventional vehicles with combustion engines on the same production lines in their plants. BMW boss Oliver Zipse calls this flexibility in capacity utilization „technology openness“.

Zipse fares better with this strategy. This is because the approach is more cost-efficient and less risky than the path taken by VW's core brand. While the Munich-based company is gradually expanding its existing combustion model series with e-drives, the Wolfsburg-based company manufactures its separate ID model series in separate plants. The result is costly underutilization due to falling demand. This has led to a complete production standstill at some Group sites. This reflects VW's structural weaknesses. Lower Saxony carries weight with its share of votes. This leads to decisions that do not always follow economic logic. For VW Group CEO Oliver Blume, the restructuring is therefore a balancing act.

The bumpy transformation shows that the days of diesel and petrol are far from over. German manufacturers are growing primarily with hybrids, i.e. a combination of combustion engine and electric drive. The EU, which decided two years ago to phase out combustion engines by 2035, finds itself in a dilemma as a result. Brussels will miss its targets with bans. Commission President Ursula von der Leyen must present alternatives in a review scheduled for 2026. Anything but would be negligent.