For Germany’s automakers, 2023 marks the end of a difficult year. Investors are used to better results from the DAX-listed manufacturers BMW, Mercedes-Benz, and Volkswagen.

In the past year, shareholders could only really profit from investing in Munich. The BMW stock increased by almost 20 percent over the course of the year, putting it on par with the overall index. Mercedes-Benz only saw a small increase of 1.4 percent. Investors who had bet on VW’s preferred stock even ended the trading year with a slight loss.

Cold end to electric car subsidies The industry is facing major challenges, and not just since last year. With the opening of Tesla’s factory in Grünheide near Berlin, the traditional manufacturers now have the hip young competition practically at their doorstep. Tesla vehicles are becoming increasingly common on German roads, while electric cars from established manufacturers are selling comparatively slowly.

In addition, the subsidy programs have expired. A year ago, hybrid vehicles were removed from the subsidies, and just before Christmas, the federal government completely stopped the purchase premiums. The move came over a weekend, took effect overnight, and caught customers and manufacturers off guard. The subsidy program was actually supposed to run until the end of 2024.

Self-created market gap As a result, some manufacturers dipped into their own pockets to offer customers the often already calculated but not yet finally requested subsidy – that is, a corresponding price reduction. For the federal government and its climate policy goals, the communication was once again a disaster. In the new year, demand for electric cars is likely to continue to decline.

To make matters worse, an entire segment is left out: affordable electric cars are still hardly available on the German market, with only 3 models currently available for an entry price of under 30,000 euros.

Chinese manufacturers score – and expand This gap could soon be filled by new competitors from the Far East: China’s largest electric car manufacturer BYD has just announced plans to build its first factory in Europe. Other manufacturers from the Middle Kingdom are likely to follow suit soon – and attract interest, unless „the established“ come up with something quickly.

Because in addition to affordable prices, Chinese models also impress with mature technology. In terms of autonomous driving, some Asian companies are far ahead of the Europeans. More competition, less government subsidies, and at the same time high production costs, fueled by wage increases, exploding energy prices, and material costs, make the industry look ahead to a rather difficult year in 2024.

BMW, Mercedes-Benz, and Volkswagen are on the verge of losing their strong position in the European and global automotive market – because Germany is not managing to electrify properly and quickly.