In the pursuit of the greatest possible self reliance in key technologies, billions have been mobilised in Germany. Semiconductors and battery technology, which are of particular importance for the transformation of the automotive sector as one of Germany's most important key industries, have been at the centre of political subsidy strategies. However, the interim results here are sobering.

As a result of the crisis at the US industry icon Intel, the planned gigantic semiconductor plant in Magdeburg, for which the German government had pledged 10 billion euros in subsidies, has been put on ice. Northvolt, Europe's greatest hope in battery production, which has raised a total of around 15 billion euros in equity and debt capital, and was at times tipped as a stock market candidate, suddenly became a restructuring case. Production problems and delivery delays led, among other things, to the cancellation of a 2 billion euro order from BMW.

Politicians are still sounding optimistic about the future of the planned battery cell factory in Heide, Schleswig-Holstein. Almost a billion euros in subsidies and guarantees have also been mobilised here. But the insolvency of a Northvolt plant in Sweden is fuelling doubts about the realisation of the project. This has now been followed by another piece of bad news, from Saarland: a planned chip plant, in which the automotive supplier ZF wanted to cooperate with the US company Wolfspeed to produce semiconductors for power electronics, is also facing cancellation.

Europe's current share of global battery cell production is a meagre 3%. The target set by the EU Commission of one quarter by the end of the decade seems almost unattainable – especially as production elsewhere, such as in Italy, is also being pulled back. The situation is no better for semiconductor production. The EU is aiming for a 20% market share here. The TSMC plant in Dresden alone, whose construction has already begun, will not be enough to achieve this.

While Wolfspeed's planned chip factory is also a failure due to technical problems, it is not least the faltering transformation of the automotive industry that is disastrous for the ambitious plans, especially for batteries. There is no sign of a radical turnaround in e-mobility. Instead, sales of e-cars in Europe are developing so sluggishly that there is no room for growing demand for batteries. Instead, manufacturers are being forced to ramp up combustion engine production in parallel with hybrid vehicles, in order to avoid completely bypassing customer demand. Still unsatisfactory performance and charging times, unresolved problems with the charging infrastructure and, above all, the high prices of electric cars are seen as obstacles.

The local expansion of key technologies in order to fulfil political self reliance goals is obviously economically inefficient if the value chains based on them have not been established to any extent. Pouring billions of euros into battery and semiconductor manufacturers based solely on the hope that this will one day develop into a prosperous industry is not rational, and will not be enough to keep private investors on board, without whom it will not work.

Innovation does not come from funding pots, as the digital sector has amply demonstrated. For example, the production of Nvidia's high-performance AI chips has not required any subsidies to date, because all development and manufacturing costs can be passed on to customers. This is therefore also compatible with possible resilience goals of the US government, as production would still be profitable in the USA if it were to be relocated there completely. The construction of data centres – the most important critical infrastructure of the AI revolution – is also evidently viable everywhere without funding. Hyperscalers Google Cloud and Microsoft have announced investments worth billions in Germany without holding out their hands.