Press Releases

Mattes: German automotive industry invests heavily in climate protection

Berlin, 02 July 2019

Number of e-models will grow to 150 by 2023 – Charging infrastructure must be expanded to provide full coverage – Digitization, connectivity and automated driving promote innovation – Defend free trade against increasing protectionism

Statement delivered by Bernhard Mattes, President of the German Association of the Automotive Industry (VDA), at the VDA’s half-year press conference in Berlin on July 2, 2019

Ladies and Gentlemen,

May I welcome you most cordially to the VDA’s half-year press conference. At such events we have previously focused on market developments. Today we have changed the running order: the domestic market figures have just been published in a press release. For the year 2019 as a whole we expect the German passenger car market to total 3.4 million vehicles (-1 percent). Of course I will be happy to answer your questions, including questions about the international markets.

Here are some figures up front:

  • In 2019 Europe will record sales of 15.5 million new vehicles, marginally below the very high level from 2018 (-1 percent).
  • The US light vehicle market, which in 2018 also produced a very strong total of 17.2 million vehicles sold, will show a slight fall in 2019, down to 16.9 million vehicles (-2 percent).
  • In China we expect sales of 22.3 million new vehicles (-4 percent).
  • In 2019 the global passenger car market will have a total slightly down on last year’s result, at nearly 83 million units (-2 percent) – but still around 50 percent higher than in the years 2008 and 2009! (Global market: 57.9 million cars in 2008; 55.3 million cars in 2009).

We are pleased to see that in China German group brands are doing better than the overall market. Our market share over the first five months of this year amounted to 23.7 percent – which is an impressive two and a half percentage points higher than in the same period last year (21.3 percent). In May our market share came to a huge 24.9 percent! The German premium manufacturers are performing far better than the market as a whole. Up to the end of April they increased their passenger car production in China by 8 percent.

So that was just a few figures from the market.

Today we are highlighting topics surrounding innovation and the future, because the entire automotive industry is currently undergoing a major process of transformation.

It covers three broad areas:

  1. climate protection, electric mobility and alternative powertrains,
  2. digitization, connectivity and automated driving,
  3. globalization, trade and increasing protectionism.

This transformation process naturally also affects the IAA. We are therefore redesigning the IAA. I will also say something about this. What is the IAA’s new orientation? How does the IAA live up to its aspiration to be the leading platform for mobility? And what can you as IAA visitors expect to find?

The German automotive industry is determined to contribute to climate protection

The German automotive industry is determined to contribute to achieving the climate protection targets. Manufacturers and suppliers are working on many new products and services enabling them to offer effective solutions for all mobility and transport needs. But it is also true that alternative powertrains can only unfold their full CO2 impact if they are applied using renewable energy. New forms of mobility and renewable forms of energy are two sides of the same coin.

We aim to continue playing a leading role on the world’s markets. That is the only way that we can also secure employment in Germany. For this to happen, we have to tackle the challenges with determination – which is precisely what the German automotive industry is doing. Our companies – OEMs and suppliers alike – are investing heavily in alternative powertrains, especially in electric mobility. Successive new models emit less and less CO2. In addition, we are striving to realize CO2 neutrality throughout the value-creation process – from development, production and marketing all the way to vehicle use and recycling. To this end, we need appropriate regulatory conditions – the mobility of the future is not a one-way street. I would like to show you how we are implementing our strategy, what we are doing to realize it – and what we need.

Electric mobility is necessary for achieving the CO2 targets

In the next few years the transformation will focus on electric mobility – fully electric vehicles and plug-in hybrids. The EU’s very ambitious CO2 fleet limit values for 2030 will necessitate rapid market penetration by e-vehicles. Even if it is not being said very loud in Brussels, the fact is that for the first time these fleet limit values also implicitly define the technology with which the targets can be reached.

A decrease of 37.5 percent in CO2 output means that 7 to 10.5 million e-cars must be on Germany’s roads by 2030. That will be possible only if there is a high level of customer acceptance in the presence of optimal regulatory conditions – and it is definitely not something that it is going to happen by itself. The German automotive industry is doing a vast amount of advance work to encourage this process. During the next three years the manufacturers and suppliers will invest 40 billion euros in the research and development of alternative powertrains. This input will culminate in an impressive “model offensive”: by 2023 our OEMs will have over 150 e-models on offer, i.e. five times as many as today. One third of the world’s patents in the fields of electric mobility and hybrid drive come from Germany. This shows that the German automotive industry is acting from a strong position and is making a massive effort to drive electric mobility forward. This applies both to manufacturers and to suppliers!

A week ago, discussions with the leaders of the major parties in Germany’s ruling coalition and of trade unions defined some significant impulses. All the participants perceive a common task.

Why? The EU’s target for 2030 – a reduction of 37.5 percent in CO2 emissions from passenger cars – is extremely ambitious and demanding. For our companies, that means making an enormous effort. They are investing tens of billions of euros to this end. This is because the transformation spans not only the products, but also their manufacture, services and the entire value chain. Similar efforts are also necessary when it comes to building the infrastructure, for which the automotive industry cannot take sole responsibility. Why? Because we are dealing not only with a new type of propulsion whose ramp-up we want to drive forward in any way we can. This is also a politically and socially driven switch to a different system.

The key point is that the charging infrastructure in the public and private spheres must be rapidly and sustainably expanded to provide universal coverage. Today we have 17,400 public charging points. By 2030 we will need a million public charging points, and an additional 100,000 fast charging points and several million private charging points. That is the only way that we can achieve a high level of customer acceptance. Electric mobility must be visible to people!

The good thing is that an additional one billion euros will now be made available for the public and private charging infrastructure. This initiative on the part of the Federal Transport Minister is an important step. The municipalities must also push the topic forward energetically. They know better than anyone where the demand for electricity to charge vehicles is the greatest, how much space is required, and how the retail trade and parking-lot operators can be brought on board. Every municipality should set itself specific objectives for establishing the charging infrastructure, and the Government and the federal states must provide support.

A deciding factor will be an approach coordinated at all levels. Obstacles must be removed swiftly. This includes tenancy and residential property law, and the elimination of hurdles, also in the energy industry legislation. Together with policymakers and trade unions, we have agreed to combine all these points into a master plan that will be drawn up and implemented swiftly.

The promotion of investment in vehicles with alternative powertrains must be given a firm basis. The proposals discussed by the German Government constitute a positive signal and should be realized quickly. This also includes extending the environmental bonus.

The main focus is indeed on electric mobility, but that does not mean we are putting all the other options “back on the shelf.” We are continuing to work on alternative powertrains and fuels, such as climate-neutral e-fuels, CNG and hydrogen, to mention just a few. Think of heavy-duty commercial vehicles that have to achieve a 30 percent CO2 reduction by 2030. For them in particular, we cannot bet everything on the battery card – in the medium term we need climate-neutral e-fuels and hydrogen. Our companies are actively driving research and development forward. Yet political preparations are necessary for these technologies to become established on the market.

The most important component is the voluntary setoff of renewable fuels against the CO2 fleet targets. This could be introduced during the review of the EU’s fleet regulation – due in 2022 for heavy-duty commercial vehicles and in 2023 for passenger cars. We are already promoting this option. CO2 reduction requirements for renewable fuels are also important – addressed to the petroleum industry. That will function in the context of the national implementation of the Renewable Energy Directive (RED II). Furthermore, together with partners from the energy and petroleum industry the VDA has proposed a market introduction program for e-fuels. We also support the new initiatives of the Federal Research Minister.

There is another point I consider to be important: the CO2 requirements apply right across the EU. In the coming years, four or five of the 28 EU countries will have to bear the main burden of achieving the targets – for the whole EU – because in many other EU states people do not have the means for electric mobility to become established quickly on the market. For this reason, we regard making the CO2 targets even stricter (an option being discussed primarily in Germany) as highly problematic. The companies need reliability. Reliability is very valuable. Competitors exist around the globe. We must not jeopardize the international competitiveness of this key sector.

Digitization, connectivity and automated driving encourage innovation

The second major driver of innovation is digitization. Our goal is “Vision Zero” – greater safety, efficiency, sustainability and comfort. Digitization and connectivity will make a decisive contribution here. This is why our manufacturers and suppliers are committed to connected and automated driving. For example, the German automotive industry holds almost half of all patents in this field worldwide. We support the revision of the “General Safety Regulation” on the initiative of the European Commission. It will enhance the safety of vehicle occupants and other road users.

Here are just a few examples:

  • The highway driving assistant will reduce the strain on drivers.
  • The digital route planner using GPS will save time.
  • Language assistants will make driving safer and more convenient.
  • Parking apps will render the search for a parking spot largely obsolete.

In order to rapidly realize connectivity between vehicles and between a vehicle and the infrastructure, binding plans must be established for the regulations governing the infrastructure. And alongside connectivity, we need better traffic management, plus the legal and infrastructural groundwork to enable the most modern transportation services.

What, exactly, is involved? By 2025 dynamic mobile telephony must be universally available, which must include 5G along the main transport routes and in urban areas. The legal regulations for higher levels of automation must also be put in place quickly. There must be a guarantee that the infrastructure can communicate with the vehicles, so that traffic lights and vehicles can “talk to each other.” In addition, AI competence must be enhanced. It forms the basis for innovative products, services and production procedures.

Moreover, the Passenger Transport Act [Personenbeförderungsgesetz] has to be revised. The current version is several years old and is not suitable for application to digital services such as ridesharing or ride-hailing. The advantages of the reform will more efficient urban traffic and improved local transportation in rural areas.

In the interest of all citizens and the industry, these tasks should be addressed and implemented swiftly.

Defend free trade and globalization against increasing protectionism

We have a third, very important topic that occupies our companies: around the world, free trade is coming under increasing pressure. Active globalization is of crucial importance for the German auto industry. Three out of four passenger cars rolling off production lines in Germany are destined for export, most of them being shipped to the United Kingdom and the US. We also have a strong presence on major markets, with many factories of our own. For example, our firms employ more than 120,000 people in their US plants, more than 80,000 of them at facilities of German suppliers.

Worldwide free trade must be promoted even if we are up against stiff resistance. We need modern free trade agreements, and we need the elimination of non-tariff trade barriers. The free trade agreement between the EU and Mercosur is a promising signal. It makes it clear to everybody that free trade and the removal of trade barriers are of very great importance to significant parts of the world. Over 260 million people live in the Mercosur region, and in 2018 3.2 million light vehicles were sold there. In Brazil alone, our OEMs and suppliers operate 120 production sites, and they have more than 20 facilities in Argentina. The free trade agreement between the EU and Vietnam is also a positive development.

Trade disputes cause massive amounts of damage – to all those involved. On the other hand, the finance markets react rapidly to initial signals that the tension is easing off – such as the recent handshake between US President Trump and China’s President Xi Jinping. We hope that reopening the negotiations will bring constructive results and we continue to back the mutual elimination of import tariffs in the interest of both sides.

Another objective must also be to improve the conditions for innovation around the world. One aspect here is protecting investments and intellectual property. In Germany we also need a response to the increasing global tax competition. A global minimum rate of tax, like the one currently being discussed at G20 level, must be moderate. It must not lead to the existing regulations being tightened up even more, and double taxation must be avoided.

The aim here is to strengthen Germany’s competitiveness as an industrial location. It is a good thing that the Federal Minister for Economic Affairs has initiated the discussion of a national industrial strategy. But here, too, the many medium-sized firms must be taken into consideration. Policymakers should concentrate on improving the regulatory conditions. We perceive a need for improvement in all these fields – energy prices, corporate taxes and social levies.

IAA evolving into a comprehensive platform for future mobility

In ten weeks from now, the IAA Cars will open its doors in Frankfurt am Main. We expect a large number of world premieres – including numerous new e-models. As the entire automotive industry is evolving, so too is the IAA: from an exhibition into a comprehensive platform for mobility, where all the relevant players in future mobility will be present – OEMs, hi-tech firms, suppliers, mobility service providers and startups. “Driving tomorrow” is the IAA’s leitmotif.

At this IAA the participants will experience for the first time the new formats IAA Conference, IAA Exhibition, IAA Experience and IAA Career. This makes the IAA much more than a stage for presentations; it is also a place for networks, discussions and demonstrations. As a platform the IAA aims to support the networking of all players in new mobility. At the IAA 2019 we are sending out an important signal for the future of a whole industry: we want to inspire, enter into dialog, and engage in discussions.

Summary

  • Our companies are investing heavily in electric mobility and alternative powertrains, digitization and connectivity.
  • They are making gains on important markets – Western Europe, China, Brazil, Mexico and Russia – and actively support free and fair trade.
  • During the transformation process, we need strong partners in politics and society. Far more visible political inputs are necessary to pave the way for the mobility of tomorrow, especially in the case of the charging infrastructure.
  • The mobility of tomorrow demands action from all players in society. It cannot be delegated to one single sector. All the stakeholders – politicians, industry and society – must contribute to ensure a successful transformation.
  • The German automotive industry is tackling the new challenges with great commitment, as will be evident at the IAA 2019. I will be delighted to see you again, at the latest in Frankfurt in September!
Eckehart Rotter
Eckehart Rotter Head of Department Press

Tel: +49 30 897842-120 Fax: +49 30 897842-603
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