Tesla
A new era will start in 2021 with the launch of the largest automotive factory in Germany, with a 2 million vehicle output, and the largest battery factory worldwide, with up to 250 GWh production capacity. 40,000 employees will work in Berlin in 3 shifts, and with the help of new, innovative, and groundbreaking technology, they will produce and deliver 100% battery electric vehicles (BEVs) that will soon drive 700 or 800 km on a single charge, and later 1,000 km.
That new shiny factory does not belong to one of the 5 famous German automakers, but to the US technology company Tesla. BMW, Daimler, Porsche, Audi, and VW will soon not be the largest automakers in Germany. Let that sink in.
BMW
The i3 needed to improve, and follow-up models have been stalled. The expensive carbon chassis was never intended for truly large volume. As a side effect, frustrated innovative, creative, and smart engineers left BMW, partly founding their own BEV startups in China or the USA.
Mercedes
Out of the 170,000 employees, 30,000 are announced to be cut in the coming years, and the high debt rate that Daimler shares with BMW and VW forced the organization to close plants in its trucking unit and cut cost in administration too.
Investments in autonomous vehicles are stopping despite a huge previous announcement with Bosch.
The EQC, the only pure BEV today, is a clear miss and has disappointed on all levels. Delivery numbers are the lowest of all German BEVs, and although customers may enjoy the design and interior of a true Mercedes-Benz, the model is not making a difference, a clear fail from an engineering and commercial perspective.
Mercedes-Benz CEO Ola Källenius a few weeks ago announced that Daimler will be a much smaller company in 5 years, which is in line with my previous prediction that all major German automakers will shrink and focus on a profitable niche unless they can design and produce enough competitive BEVs to grow again.
Mercedes might be silently controlled by shareholders and partners like Geely in the future. Geely owns about 10% today and might increase that share soon.
Volkswagen
While the marketing and PR organization did a good job creating the impression VW is a major BEV player, the truth is that VW has equipped former ICE vehicles (eGolf, eUP!) with batteries and sold them. Their specifications have been far below standards, but still good enough for many customers to buy them.
The Volkswagen Group CEO, Herbert Diess, rightfully admires what his peer Elon Musk has achieved at Tesla in just a decade, and uses him as an example to motivate a highly hierarchical, massive, and slow organization. In an interview in early November, he confirmed that Tesla’s market capitalization is deserved, which gives us deep insights into where he sees future value creation in the automotive industry. Volume in units is, in his opinion, not any longer a measure for size or worth.
Financially, VW has the highest debt of all automakers globally, and adding unfunded pension obligations and other liabilities makes Volkswagen Group vulnerable and weak against external influences, challenges, and investors.
Although Volkswagen is in a weak position right now, its strategy to go fully into the BEV business is the right approach to overcome the bottleneck, and it may emerge with luck as a valid #2 BEV company globally. That is what I believe CEO Herbert Diess is aiming for, because it’s simply not realistic to become #1.
