Since the last federal elections in 2017, Germany has been through an ecological metamorphosis. Public sentiment, particularly among younger people, has shifted decisively in favor of strong action to reduce carbon emissions and prevent a climate emergency. Even before the damaging floods in the summer of 2021, the rising commitment to green issues could be seen in the level of popular support for the \u201cFridays for Future\u201d movement started by Greta Thunberg.<\/h6><\/div><\/div>The Green Party has achieved its best-ever election results, taking a 14.8 per cent share of the vote, up 5.8 percentage points on 2017. As a result, the party is now a key player in coalition negotiations that we believe are most likely to result in either a so-called \u201ctraffic light\u201d coalition of the SPD, the Green Party and the economically liberal FDP, or the \u201cJamaica\u201d coalition made up of the CDU\/CSU, the FDP and the Greens. We assume that if either of these three-party groups succeeds, and the country avoids falling back on the \u201cgrand coalition\u201d of the SPD and CDU\/CSU, then the Green Party will claim the Ministry of Transport as its price for agreeing to other compromises.<\/p>
Of course, OEMs operate on far longer timescales than the four-year government term: planning cycles span 10 years, and models are in production for five years. However, decisions made on green transport policy will undoubtedly have an impact on the country\u2019s dominant car industry. In turn, the size of Germany\u2019s car market, which generates \u20ac400 billion a year in sales, means it will pioneer change across Europe and even influence the automotive industry in China.<\/p>
As we noted at\u00a0last month\u2019s IAA event in Munich<\/a>, German OEMs are now making e-mobility their priority, with affordable battery electric vehicles (BEVs) in the best-selling B and C categories planned for the middle of this decade, plus support for the full EV ecosystem, including the all-important charging network. This puts the industry in alignment with the wishes of voters on September 26, and the course is therefore set for transformation on both the product and the market side. But how will the choices of the eventual coalition government affect the plans OEMs and suppliers already have in motion?<\/p><\/div>Impact of a traffic light coalition
<\/strong><\/h3>The auto sector is the largest industry in Germany, employing 1.8 million people. However, the role of cars in the life of the nation also goes far beyond their industrial and economic contribution. Cars have been dubbed the \u201cfavourite child\u201d of Germans, the majority of who remain committed to keeping their individual mobility.<\/p>
With this in mind, we expect the full focus of the traffic light coalition will be on getting more BEVs on the roads. This will drive lower emissions in line with the Green Party\u2019s goals. It will also support the SPD\u2019s priorities of preserving private car ownership, particularly among lower income groups, and protecting jobs in the car industry, given the close links between the SPD and the labor unions.<\/p>
BEVs will therefore benefit from government support out to 2025, and this will also help keep Germany on track to meet its EU emissions obligations under the \u201cFit for 55\u201d program. To achieve the Fit for 55 targets, around 14 million vehicles, or 30 per cent of the cars on Germany\u2019s roads, would have to be electric by 2030.
As well as government support for BEVs, we would also expect a gradual withdrawal of support for plug-in hybrid electric vehicles (PHEVs) and higher taxes on internal combustion engine (ICE) cars. However, the Green Party\u2019s call for ban on new ICE cars from 2030 will not happen in a traffic light coalition, because of the scale of the impact on German jobs.<\/p><\/div>
Impact of a Jamaica coalition
<\/strong><\/h3>The combination of the yellow and black strands of this group \u2013 the economically liberal and car-friendly FDP, and the CDU\/CSU \u2013 are likely to be less focused on the BEV, and to maintain a more open position when it comes to alternative technologies for reducing emissions. That would keep PHEV and ICE vehicles, as well as hydrogen-powered fuel cell electric vehicles (FCEVs), in the mix, and would be particularly applicable to commercial vehicles. We would also expect this coalition group to support further research into synthetic fuels (e-fuels) as an alternative to gasoline and diesel.<\/p>
Maintaining openness on which technology will supersede ICE in the long-term does mean that the right solution would be driven by industry, rather than by politics. However, given the significant investments OEMs have already made in BEVs, it is not clear why the next government would want to undermine their progress. From the perspective of the auto industry, it will be important that maintaining an open mind on which engine technology will \u201cwin\u201d in future, and support for research into e-fuels and hydrogen technologies, does not slow down the roll out of the charging infrastructure and other investments needed to ensure Germany and German carmakers meet EU-wide emissions targets.<\/p><\/div>
What about carbon taxes?
<\/strong><\/h3>We expect fuel prices to go up, whether the traffic light or the Jamaica coalition wins. The Green Party are seeking to increase the carbon dioxide tax from \u20ac25 per tonne of CO2<\/sub>\u00a0to \u20ac60 per tonne by 2023. Doing so would increase the additional cost of the CO2<\/sub>\u00a0tax on a liter of diesel from around 8 cents to around 20 cents.<\/p>However, if the traffic light coalition with the SPD forms the next government, we do not expect the CO2<\/sub>\u00a0tax to increase by such an amount. This is because the SPD does not want the cost of the xEV transition to be borne equally by all drivers, when higher income groups currently buy the majority of xEVs. We expect a Jamaica coalition would agree to a gradual increase to close to \u20ac60 per tonne, in line with the Green Party\u2019s pledge, by 2023\/34.<\/p><\/div>Subsidies for China?
<\/strong><\/h3>The scale of Germany\u2019s car industry and its leading position in Europe means the policies taken by the next government will impact the transition away from gasoline and diesel engines across the continent. However, another important point to note is the possible impact in China. The country is the world\u2019s biggest BEV market, and to date, most of the country\u2019s EVs have been made by Chinese OEMs (see chart below). However, the government is scaling back subsidies for BEVs and PHEVs. If growth in the Chinese market slows as a result, BEV subsidies in Germany will make the market more appealing for Chinese OEMs, which are already increasing their sales in this country.<\/p><\/div>
![\"\"](\"https:\/\/www.berylls.com\/wp-content\/uploads\/2021\/10\/xEV-Cockpits_2021_Charts.jpg\")
<\/h6><\/figure><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\n\t\t\t\n\t\t\t\t\t\t\n\t\t\t\t\n\t\t\tInsight download and author information\n<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\t\n\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\n \n\n \n\n \n <\/a>\n <\/div>\n \n <\/a>\n <\/div>\n \n <\/a>\n <\/div>\n <\/div>\n\n <\/div>\n \t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\t\n\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\n \n \n \n\n\t Author<\/h2> <\/div>\n \n
The Green Party has achieved its best-ever election results, taking a 14.8 per cent share of the vote, up 5.8 percentage points on 2017. As a result, the party is now a key player in coalition negotiations that we believe are most likely to result in either a so-called \u201ctraffic light\u201d coalition of the SPD, the Green Party and the economically liberal FDP, or the \u201cJamaica\u201d coalition made up of the CDU\/CSU, the FDP and the Greens. We assume that if either of these three-party groups succeeds, and the country avoids falling back on the \u201cgrand coalition\u201d of the SPD and CDU\/CSU, then the Green Party will claim the Ministry of Transport as its price for agreeing to other compromises.<\/p>
Of course, OEMs operate on far longer timescales than the four-year government term: planning cycles span 10 years, and models are in production for five years. However, decisions made on green transport policy will undoubtedly have an impact on the country\u2019s dominant car industry. In turn, the size of Germany\u2019s car market, which generates \u20ac400 billion a year in sales, means it will pioneer change across Europe and even influence the automotive industry in China.<\/p>
As we noted at\u00a0last month\u2019s IAA event in Munich<\/a>, German OEMs are now making e-mobility their priority, with affordable battery electric vehicles (BEVs) in the best-selling B and C categories planned for the middle of this decade, plus support for the full EV ecosystem, including the all-important charging network. This puts the industry in alignment with the wishes of voters on September 26, and the course is therefore set for transformation on both the product and the market side. But how will the choices of the eventual coalition government affect the plans OEMs and suppliers already have in motion?<\/p><\/div> The auto sector is the largest industry in Germany, employing 1.8 million people. However, the role of cars in the life of the nation also goes far beyond their industrial and economic contribution. Cars have been dubbed the \u201cfavourite child\u201d of Germans, the majority of who remain committed to keeping their individual mobility.<\/p> With this in mind, we expect the full focus of the traffic light coalition will be on getting more BEVs on the roads. This will drive lower emissions in line with the Green Party\u2019s goals. It will also support the SPD\u2019s priorities of preserving private car ownership, particularly among lower income groups, and protecting jobs in the car industry, given the close links between the SPD and the labor unions.<\/p> BEVs will therefore benefit from government support out to 2025, and this will also help keep Germany on track to meet its EU emissions obligations under the \u201cFit for 55\u201d program. To achieve the Fit for 55 targets, around 14 million vehicles, or 30 per cent of the cars on Germany\u2019s roads, would have to be electric by 2030. The combination of the yellow and black strands of this group \u2013 the economically liberal and car-friendly FDP, and the CDU\/CSU \u2013 are likely to be less focused on the BEV, and to maintain a more open position when it comes to alternative technologies for reducing emissions. That would keep PHEV and ICE vehicles, as well as hydrogen-powered fuel cell electric vehicles (FCEVs), in the mix, and would be particularly applicable to commercial vehicles. We would also expect this coalition group to support further research into synthetic fuels (e-fuels) as an alternative to gasoline and diesel.<\/p> Maintaining openness on which technology will supersede ICE in the long-term does mean that the right solution would be driven by industry, rather than by politics. However, given the significant investments OEMs have already made in BEVs, it is not clear why the next government would want to undermine their progress. From the perspective of the auto industry, it will be important that maintaining an open mind on which engine technology will \u201cwin\u201d in future, and support for research into e-fuels and hydrogen technologies, does not slow down the roll out of the charging infrastructure and other investments needed to ensure Germany and German carmakers meet EU-wide emissions targets.<\/p><\/div> We expect fuel prices to go up, whether the traffic light or the Jamaica coalition wins. The Green Party are seeking to increase the carbon dioxide tax from \u20ac25 per tonne of CO2<\/sub>\u00a0to \u20ac60 per tonne by 2023. Doing so would increase the additional cost of the CO2<\/sub>\u00a0tax on a liter of diesel from around 8 cents to around 20 cents.<\/p> However, if the traffic light coalition with the SPD forms the next government, we do not expect the CO2<\/sub>\u00a0tax to increase by such an amount. This is because the SPD does not want the cost of the xEV transition to be borne equally by all drivers, when higher income groups currently buy the majority of xEVs. We expect a Jamaica coalition would agree to a gradual increase to close to \u20ac60 per tonne, in line with the Green Party\u2019s pledge, by 2023\/34.<\/p><\/div> The scale of Germany\u2019s car industry and its leading position in Europe means the policies taken by the next government will impact the transition away from gasoline and diesel engines across the continent. However, another important point to note is the possible impact in China. The country is the world\u2019s biggest BEV market, and to date, most of the country\u2019s EVs have been made by Chinese OEMs (see chart below). However, the government is scaling back subsidies for BEVs and PHEVs. If growth in the Chinese market slows as a result, BEV subsidies in Germany will make the market more appealing for Chinese OEMs, which are already increasing their sales in this country.<\/p><\/div>Impact of a traffic light coalition
<\/strong><\/h3>
As well as government support for BEVs, we would also expect a gradual withdrawal of support for plug-in hybrid electric vehicles (PHEVs) and higher taxes on internal combustion engine (ICE) cars. However, the Green Party\u2019s call for ban on new ICE cars from 2030 will not happen in a traffic light coalition, because of the scale of the impact on German jobs.<\/p><\/div>Impact of a Jamaica coalition
<\/strong><\/h3>What about carbon taxes?
<\/strong><\/h3>Subsidies for China?
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Author<\/h2> <\/div>\n \n
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