Germany's automotive industry faces high investment and low demand for electric cars

Germany's automotive industry is going through difficult times: it is making or planning major investments in electric car production, while demand for these vehicles remains below expectations. The international news site Clean Energy Wire reported.

According to its CEO, Oliver Blume, Volkswagen has to make a considerable effort to meet its strategic goals amid high costs and falling sales.

"Although we have already introduced programmes to improve cost efficiency, investors have little confidence in them and Volkswagen's share price continues to fall. High one-off costs for converting production lines to electric cars and batteries, as well as compensation for employees who are leaving, are affecting the company's profits, particularly at its core VW brand," the company said.

The automaker will therefore have to reduce investment in the coming years and seek ways to cut spending, for example through joint ventures with other electric car manufacturers such as Rivian, according to its CEO.

Low demand for electric cars

However, Europe's largest automaker is not the only one facing problems. According to the Frankfurter Allgemeine Zeitung, for example, German automotive supplier ZF Friedrichshafen will have to cut up to 14,000 of its 54,000 jobs in Germany by 2028. According to the company, the cuts are due to a decline in orders from automakers and low interest in electric cars.

The automotive industry is a key pillar of the German economy and directly employs hundreds of thousands of people in the country. The transition to electric mobility is shaking up the entire supply chain, while German automakers face fierce competition from abroad.

The German government's goal of having 15 million electric cars on German roads by 2030 is beginning to look increasingly unattainable. According to the Agora Verkehrswende think tank, the only way to achieve it is to deepen cooperation with Chinese automakers and technology suppliers.