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Germany’s Electric Car Program Is About Defending Its Auto Giants’ Profits

Germany’s politicians have decided that the country ought to become carbon neutral. In the run-up to the general election on September 26, all parties have committed to this goal, with the hard-right Alternative für Deutschland the only exception. One key element in this program lies in the automotive sector, Germany’s key domestic industry. The auto companies and their suppliers haven’t called for climate protection — in fact, they aren’t too happy about the mooted changes. Their business model is mostly based on the resource- and energy-intensive manufacturing of diesel and gasoline vehicles, which run on fossil fuels. Instead, it’s mainly been start-ups such as StreetScooter — a firm which makes the cars for the German postal service — that have specialized in electro-mobility, thus occupying the economic niche of “sustainable mobility solutions.”

Nonetheless, today the German state aims for the total transformation of both auto production and the vehicles it churns out, in order to make them CO2-efficient and, ultimately, carbon-neutral. The problem is, this industry is supposed to make these changes out of its own business interests, but the new technology isn’t yet profitable for private firms.

The current German government’s Climate Action Programme 2030 clearly identifies the old fossil-fuel-centric technology as a model that’s about to be phased out. As it puts it,

The heart of the climate protection program is the new CO2 pricing system for transport and heating from 2021, with the costs borne by the fuel trade: when companies sell heating oil, liquid gas, natural gas, coal, gasoline or diesel, they will require a certificate as a “pollution right” for each ton of CO2 that the substances will cause in consumption.

From the production of the pistons at MAHLE GmbH, to the manufacture of transmission belts at the Daimler plant in Romania, to the diesel engine itself, the entire value chain of the German car has so far been based on the cost-effective use of both state-owned and private infrastructure to supply cheap fossil fuel. This is also why the change to electric cars could have such dramatic consequences: huge parts of the German auto industry are in danger of losing their international competitiveness because of a politically motivated change. Hence why auto firms are complaining — and invoking the 1 million jobs in the sector.

This, in turn, calls for political support for their interests — easing the transition for big private firms. From this perspective, the previous “dirty” business of the car industry should not simply be banned; rather, the state ought to provide the necessary funding for the change to “clean” technologies. For capital to accept measures to green the industry, the electric motor first has to become profitable. And again, that’s where the state comes in — making these profit opportunities for private firms a reality through comprehensive public intervention.

For that to happen, it would first require a great deal of credit being poured into research and development by the state. After all, the necessary products and technologies still have to be developed to market maturity — or even still need inventing. Currently, the main focus is hydrogen production and its use. The knowledge thus achieved will then be made available to the entire German business community, and the private investment that follows will be subsidized so that the new technologies can be put to use. In auto-related industries, this currently applies especially to battery and accumulator production. Daimler and Bosch already withdrew from this sector years ago because Asian manufacturers enjoyed a competitive advantage. But now the German state’s insistence on a value chain “made in Europe” is making companies recalculate their options, buoyed by increased subsidies.

Second is the German state’s intervention as a legal authority. It is raising the price of CO2-heavy production to make low-emission autos more attractive. And it is also subsidizing the new technologies directly.

Third, the state is currently in the process changing Germany’s automobile infrastructure over to electric charging stations, in order to make the electric car a viable alternative to its fossil-based predecessor. Here, too, the state’s direct measures are directed at opening up business for capital where it has not been profitable so far because of the lack of electric cars on German roads. Again, a look at the Climate Action Programme 2030 shows how the state seeks to generate the capitalist interest that it expects from its companies:

The ramping-up of electro-mobility changes the demands on the distribution networks, especially when peaks occur due to simultaneous charging. For this reason, the German government will create good framework conditions to enable distribution network operators to invest in the intelligence and controllability of the networks and to expand their network with foresight so that the distribution network can also supply the targeted number of e-vehicles with high quality.

Finally, the state is also subsidizing electric car purchases directly via bonuses to private consumers and companies, thus ensuring a sales guarantee so that German capital can earn its profits as securely as possible when it does invest in the new technologies. The whole program is supplemented by the conversion of massive company vehicle fleets to electric and hybrid cars.

Germany has always depended on other nations to satisfy its energy needs. This is also why the combustion engine has long been a subject of suspicion: “our” oil is situated in the wrong countries. Initially, Germany relied on self-produced nuclear power in order to preserve its energy sovereignty in an American-dominated world market for electricity and fossil fuels; but since the Fukushima disaster, this has been replaced by the “green electricity” project. Foreign minister Heiko Maas put it in plain terms back in 2019:

The energy turnaround is not only the switch from fossil to renewable energy — it also shifts basic political constants. By using renewable energies, states can put themselves in a position to increase their own energy security. As a result, the geopolitical instrument of energy, as we have known it for decades, is losing its power. Energy-producing countries can pursue their strategic and foreign policy interests independently.

Green energy is thus a step further in Germany’s emancipation from its big brother in the bid to become a sovereign world power itself — not only operating successfully in the American-dominated world market but dictating the rules itself. For “fossil energies,” as Maas could hardly have put it more bluntly, contain a geopolitical side that Germany is now mounting an offensive over. In this sense, the carbon-neutral future — and, as part of this, the CO2-free automotive industry — is a project for German imperialism, helping it pursue its interests as an independent global power.

For this emancipation of German capitalism from the American energy market and the implementation of electro-mobility to be possible, China — one of the economic powers that now dominates the international scene — must play a double role.

First, as an indispensable partner for German manufacturers, the Chinese auto market has long been one of the most profitable in the world, and the Chinese Communist Party’s current support for electro-mobility ensures secure sales figures for German cars. In addition, China is pushing back against US dominance and relying on green technologies for its independence.

Second, this makes China a competitor, since carbon-neutral production in capitalist society exists only as a project of rival states, each of them trying to pursue their own success at the expense of the others. The German car companies that have been let into the country en masse have paid for their management of the huge domestic market by entering joint ventures with Chinese companies that have long since created a competitive Asian car industry.

But China is also working to reverse the terms of its past relation with German capital. Aiways Automobiles Company Ltd, a young company based in Shanghai, now exports Chinese electric cars to Germany. Businessmen Fu Qiang and Gu Feng have already gained experience as managers in the automotive industry, including with the Chinese FAW Group, in which Volkswagen AG also has a stake. Employees of the company have reportedly been poached by Audi, BMW, and Daimler, among others.

German politics’ project is to emancipate its energy sector from the American-dominated world market. As in the Chinese case, this competition with the United States will first rely on cooperation with this bigger power. But the German media-political arena presents this as a truly global rescue program. As Angela Merkel already put on record at the Climate Adaptation Summit in 2020: “Germany is one of the largest donors for climate financing internationally and is fulfilling its international climate financing pledges: €4 billion have already been made available on a budgetary basis in 2019, meaning that the commitment has doubled since 2014.”

Debates on the Left about the ecological impact of electro-mobility have made a habit of failing to distinguish the climate-friendly impact of these measures from their imperialist purposes as a means of projecting global power. Indeed, environmentalists routinely criticize the German political-economic program for state sovereignty within the terms of its own purported agenda of saving the planet and humanity. They demand better measures, more subsidies for research and development, and stricter laws against “dirty” cars. Conversely, any progress that Germany makes in its competition against the US market and Chinese rivals is met with weary acknowledgement (“Some improvement, at least”).

Germany’s rulers are quite happy to accept such affirmative criticism: it addresses the government in Berlin as if it were the authority responsible for all life on the planet, and thereby confirms its sovereignty. Indeed, here its own concrete program for advancing German national power is — at least in principle — well-received, accompanied by a constant call for more of the same.

Critical minds, however, have worked out that the environmental merits of electric cars are rather dubious. Even the German government published a study in which it becomes clear that electric cars are one thing above all else: better than (or not as bad as) their petrol-guzzling counterparts. However, not even the government pursuing this program can seriously claim that private transport with millions or even billions of electric cars is actually climate friendly. For it also means the mining of rare minerals and metals all over the world, the disposal of old batteries, the continuation of individual transport, the further expansion of roads, and the need to extend charging stations all over Mother Earth. Even those who take seriously the idea of saving the world through green profits ought to doubt whether more of this kind of green capitalism really is going to save the environment.

Critics of such a state of affairs know that they have to offer an alternative. They present their constructive criticisms in terms of truly realizing Germany’s “social-ecological turn” — a slogan popular in the left-wing Die Linke party in the days before the election. It suggests that profits, jobs, and saving the natural world are actually totally compatible, if only politics would follow its particular prescriptions. One thing is certain: these friends of practical alternatives are no opponents of the hegemonic program for the German state and its economy. For at least we are making some progress in preventing the climate catastrophe. And, in a way, this is true. For this is just the climate protection that capitalism will give us — greening our biggest industry as a weapon in the competition among nations and capitals.


https://jacobinmag.com/2021/09/german-electric-car-program-auto-industry-manufacturers-jobs-profits-subsidies-carbon-neutral-climate