VDA President speaks at the congress on the National Industrial Strategy for 2030 – Politicians should set the rules, not be players – Infrastructure expansion required – Energy costs and corporate taxes need adjusting – Open and accessible markets
The Federal Ministry for Economic Affairs hosted a congress on the National Industrial Strategy for 2030 in Berlin today. At the event Bernhard Mattes, President of the German Association of the Automotive Industry (VDA), delivered a keynote statement to numerous high-ranking representatives from politics, associations, companies, trade unions, works councils and academia, and stressed:
“We endorse the initiative of the Federal Minister for Economic Affairs to stimulate a discussion about a national industrial strategy. For a long time we have pointed out that an active strategic economic policy is necessary to strengthen Germany’s industrial competitiveness and its economy. And we are willing to work actively on this consultation process.
“However, the National Industrial Strategy for 2030 places too much emphasis on activating, technology-based and project-based policies, while attaching too little importance to the necessary regulatory policies. The automotive industry believes that policymakers should concentrate on their traditional task of the setting rules and making sure they are implemented. In the world of sport, that would be the job of the sports association and the referees. Even assuming the role of coach – deciding on the tactics to be used – would cause problems in economic policy. The state may adopt this role only in justified exceptional cases. If the state sees itself as a player, it risks being caught offside.
“Accordingly, we take a critical view of the proposed national ‘participation facility’ for the state to buy stakes in individual companies. Which criteria should apply here? Is the state the better entrepreneur?
“We take an equally skeptical view of the proposed new national economic proportionality principle, according to which the scope for intervention by the state should automatically be larger, ‘the greater the national economic importance of a process.’ Where does that leave the SMEs? Do we not have many ‘hidden champions’ right here in Germany? Is economic success not decided more by speed than by sheer size?
“There is no doubt that all of us want to strengthen Germany as an industrial location. To this end, politicians should support the formation of consortia, for instance for connected and automated driving in pre-competitive R+D. Massive efforts to expand the 5G network are also urgently needed. The goal should be 5G coverage on all main transport routes and in urban areas by 2025 at the latest.
“Germany needs competitive production conditions for its industry. No matter whether you’re looking at electricity and energy costs, corporate taxation or social levies – improvements are needed in all of these areas. Out of all 28 EU countries, Germany has the most expensive industrial electricity. The burden from corporate income tax on stock corporations in Germany is 31.7 percent, i.e. much higher than the OECD average (24.7 percent). The US, on the other hand, has greatly reduced its corporate taxation (from 39.9 percent to approx. 24.8 percent). Other industrialized countries such as Austria, France and the UK have also either announced marked tax reductions or already put them into effect.
“What is the German automotive industry itself doing to enhance its competitiveness and secure the mobility of the future? We are committed to the Paris climate target. We want to contribute to making transport largely CO2-neutral by 2050.
“One major component in achieving the climate protection targets for transport will be the extremely ambitious EU fleet limit values for 2030. They are the strictest targets in the world, and can only be attained if all technological options are exploited in an expedient fashion. To put it simply, in 2030, around 40 percent of newly registered passenger cars in Europe will have to be electrically powered. By that time, the ramp-up of electric mobility will also have had a huge impact on the fleet: in 2030 there will already be 7 to 10.5 million electric vehicles on Germany’s roads. In the next three years alone, the German automotive industry will invest about 40 billion euros in alternative powertrains, primarily in e-mobility, and the number of e-models available will treble to over 100. Furthermore, our activities include developing the next generation of battery cells.
“However, the market ramp-up can proceed successfully only if demand also grows accordingly. It will therefore be necessary to have a dense, Europe-wide, customer-friendly charging infrastructure, plus a powerful electricity grid and a system of promotion that is as unified and as effective as possible. If politicians set the strictest targets for climate protection and CO2-reduction, then they must also live up to their responsibility for fast and comprehensive expansion of the charging infrastructure. In short, we need a strong shift to electric vehicles in Germany. The politicians have to take action.
“A comprehensive strategy should not exclude synthetic fuels, because climate-neutral e-fuels in particular still offer a lot of potential for reducing CO2 from transport – from the entire vehicle fleet, heavy-duty trucks, ships and aircraft. Policymakers should create smart regulatory conditions for competition between different technologies, instead of deciding on a certain technology too early.
“Alongside electric mobility, where our efforts are concentrating, our OEMs and suppliers are also continuing to develop the internal combustion engine, and we still see the potential for efficiency gains of 20 to 30 percent. Hydrogen and fuel cells are also on the R+D agenda.
“The National Industrial Strategy rightly commits to the principle of free and accessible international markets and this is something that cannot be taken for granted, given the current developments in some countries. German manufacturers and suppliers export over 75 percent of what they produce in Germany. So we depend on free and accessible markets. In addition to the EU’s activities in negotiating free trade agreements with key partners and future markets, Brussels should make more effort to achieve symmetrical market access with all countries, along with better protection of intellectual property, and a level playing field for the companies on all relevant markets.”