This is a positive sign for the trade fair in Munich. The increased number of exhibitors this year is related to the transformation of the automotive industry. In my view, it's primarily an IAA dominated by the Chinese. They will shape the event.

Yes, indeed. Chinese automakers are moving forward at a high pace. Companies like BYD, Nio, Great Wall, SAIC, and others are participating at the IAA. With battery-electric vehicles, the Chinese are in direct competition with Tesla. When it comes to software-based autonomous driving and the so-called Smart Cockpit, the Chinese are ahead of Western manufacturers. The automotive world has undergone a radical transformation. We are in an era where fast and dynamic Chinese companies are driving development. The automotive industry is entering a new age where the Software-Defined Vehicle is becoming the standard.

For the past three years, robotaxis have been operating on the streets of China's mega-cities. This has given the Chinese a time advantage in training autonomous driving algorithms. We may not be able to catch up without assistance from China. In Germany, progress is hindered by regulation and data protection. Learning software is not something our politicians favor.

Consider the tech giants in China. China and Huawei dominate modern 5G networks. In Germany, we talk about "dead zones." Huawei, Tencent, Baidu, JD, Netease are setting the direction. In China, many companies are heavily involved in autonomous and semi-autonomous driving. It caused a stir when Volkswagen sought development assistance from the Chinese start-up Xpeng in this field. Both sides formed a close partnership. Just think about it - proud German engineers are seeking expertise from the long-dismissed Chinese.

At IAA, chip manufacturers and sensor technology specialists will also be present. Laser-based sensors, known as Lidar, are crucial for autonomous driving and advanced driver-assistance systems. Even Tesla won't be able to avoid Lidar for its Autopilot. The world's largest Lidar manufacturer is the Chinese Hesai Group, while Bosch has exited this market.

It's not just about German automakers; it applies to all traditional manufacturers, including Toyota, Hyundai, or Ford. The competitive gap with the Chinese is widening. BYD recently overtook BMW in global delivery numbers, and BYD exclusively produces electric vehicles and plug-in hybrids. The company is growing exponentially. BYD excels in battery technology. To compete, we need high dynamism, and we need tutoring, for instance, in batteries or the Smart Cockpit. That knowledge comes from the Chinese. A policy of distancing from China, as advocated by Federal Minister for Economic Affairs Robert Habeck or Foreign Minister Annalena Baerbock, is toxic for the future of Germany's industrial sector.

More than a third of BMW, Mercedes-Benz, and VW's car sales are made in China. If China falters, they become unbalanced. China has faced economic challenges in the past, and there have been discussions about Chinese real estate bubbles for 15 years. Beijing has always managed to stabilize the economy. China benefits from being a technological leader on multiple fronts. The primary reason is its long-term research strategy. IAA showcases this and opens a window to China.

The EU tends to change course quickly. Priorities are reset with each electoral term. The zigzag course in Brussels and Berlin is disastrous. This is evident in the mega-subsidies for the semiconductor industry. By doing so, the government burns billions of taxpayers' money. Instead of building something long-term, they hand billions to US companies that produce standard technology under a German flag.

I believe BMW, Mercedes-Benz, and VW are moving in similar directions. VW is in the process of stabilizing itself. Mercedes quickly focused on electric drives. BMW recognized the importance of pure electric vehicles and followed suit. Within this trio, the gaps have narrowed. The benchmarks are Tesla and BYD. The gap between German manufacturers and this duo is still significant.

In the electric vehicle market, achieving economies of scale is crucial. Tesla focuses on a limited number of model variants. Tesla's production systems rely on entirely new methods, such as a massive aluminum casting machine that manufactures the vehicle's rear in a single step. This gives Tesla cost advantages that other manufacturers won't be able to match in the next five years. Germans are still focused on a wide range of technical models, which result in high production costs and are not highly valued by modern customers. Modern diversity is driven by software, not the color of nail polish. Modern diversity is scale-driven, and Tesla CEO Elon Musk uses this for aggressive price competition to outpace other manufacturers.

Electric vehicles are a business model where those manufacturers that achieve large volumes earn the most. That's where they have pricing and margin control. It's a monopoly. Musk is building factories at an incredible pace to achieve this goal. BYD is doing something similar. Differentiation for modern customers is no longer achieved through the traditional, costly diversity of variants but through software.

Investors see Tesla's scalability and speed advantages. Musk operates economically soundly. All automakers transitioning from internal combustion engines have extraordinary restructuring needs. Meanwhile, new brands and manufacturers are emerging in China at a rapid pace. Soon, Vietnamese and others will join as well. It's clear that not all will survive; many will exit. There is high pressure for consolidation. Those who don't generate economies of scale have no chance of survival.

Yes, that's important. Collaboration is one element among many. At VW, it became clear that trying to do everything alone was too big a task. Collaboration only makes sense if all parties benefit.

That's hard to say. Blume's task is to stabilize the company after problems at the software subsidiary Cariad. He has taken decisive action. Blume has reoriented the company. However, his dual role as CEO in conjunction with Porsche is problematic in terms of corporate governance. It remains to be seen how VW will manage to cope in the Tesla world.

VW is not a normal company. Due to Lower Saxony's Golden Share, the state plays a significant role, and regular shareholders are in the minority. VW is effectively a combined state and union company. This is not a beneficial setup for VW. The organization is skewed. Tesla, Toyota, and BYD operate as market-driven companies, while VW does not.

Absolutely. The volume of electric vehicles from German manufacturers is still quite limited. Therefore, incentives for electric vehicles are still necessary to advance the technology transition. This is an industry that is still in its infancy in Germany. However, environmental incentives should be phased out between 2025 and 2030. By then, the number of electric vehicles will increase significantly as battery costs decrease thanks to solid-state batteries and other innovations. Batteries represent up to 40% of an electric vehicle's cost. If battery costs are reduced by a third, electric vehicles become 12% more affordable. When considering sodium-ion batteries and similar technologies, a one-third cost reduction is conservative.

In Germany, there has been a significant failure in politics. Climate goals will never be achieved if politics continues to be so amateurish. The country needs to stabilize its infrastructure. It's a societal task to modernize the railway system, highways, build power lines, keep an eye on energy prices, and more. Switzerland serves as an example with its ASTRA organization. We need a system where politicians have no influence on the long-term use of public funds. Infrastructure should not depend on election cycles.

The German automotive market is driven by replacement demand. I expect this to take another three to four years. The economic conditions are currently unfavorable.