This is on the heels of VW also pulling out of Germany (as of just two days ago). VW is scrapping their biggest plant in Dresden and also shifting manufacturing to Eastern Europe and out of Germany for four other plants.
German automakers can not longer remain competitive, for a few reasons.
Part of this is due to declining sales in China (driven by competitive domestic EVs there), and a large part is due to the political and regulatory envornoment in the EU/Germany: these automakers are being forced to electrify as ICE vehicles are banned as of 2035, cost of labor in Germany in 4-5x what it is in eastern europe[1], electricity and gas prices (for manufacturing) are through the roof, and VW itself is 20% controlled by the state and being hamstrung by that a bit as well.
(Assuming those numbers are roughly correct) there are probably multiple factors that contribute to the overall delta, possibly including: holiday, sick leave, and maternity leave entitlement, time spent on non-core activities like union or workers rights matters, employer contributions to health insurance, limitations on hours and/or overtime, various taxes, meeting culture, general work culture, etc.
There a line of thinking in Germany that the country worked hard to build itself up post-WW2 and it should now be able to enjoy the rewards. Unfortunately the rest of the world moved on, and all of Germany’s excellent and hard-won prosperity and rights make it less competitive globally.
Germany is gonna be slapped hard because it's car manufacturers bet heavily on "combustion engines" and being THE "luxury brand" in China in 2016 when everyone could see what direction the hockey puck was going.
EVs were the future then and especially now. German car manufactures placed poor bets.
Isn't that a dream for the government? They get to claim they 'protected jobs' with the tariffs. The government ironically taxes the middle class when they purchase a vehicle via those mechanisms and keeps the money.
If your business and/or nation state culture doesn't support innovation, it must be punished via outcomes. Incentives drive outcomes.
It's humorous when folks argue that China subsidized their core industries. Of course they do, that is their culture, and aligns with their target outcomes. This is why they are a leader in the vast majority of frontier technologies [1]. They are not going to tie their hands because wealthy developed nations demand they do for silly economic configurations.
"Great Allocators of Capital" are maybe not so great after all. Maybe they were just lucky until they weren't.
> Now covering 64 critical technologies and crucial fields spanning defence, space, energy, the environment, artificial intelligence (AI), biotechnology, robotics, cyber, computing, advanced materials and key quantum technology areas, the Tech Tracker’s dataset has been expanded and updated from five years of data (previously, 2018–2022) to 21 years of data (2003–2023).
> These new results reveal the stunning shift in research leadership over the past two decades towards large economies in the Indo-Pacific, led by China’s exceptional gains. The US led in 60 of 64 technologies in the five years from 2003 to 2007, but in the most recent five years (2019–2023) is leading in seven. China led in just three of 64 technologies in 2003–2007 but is now the lead country in 57 of 64 technologies in 2019–2023, increasing its lead from our rankings last year (2018–2022), where it was leading in 52 technologies.
Indeed, if China "subsidising" their industry is working so well, why don't Western countries do it...
Right... they are too busy selling state assets or allowing local corporations to be taken by private equity or sovereign wealth funds. Which then run them for the benefit of shareholders, or the new owner directly.
Western companies don't exist to provide what consumers want and give them a fair deal anymore. They exist to screw consumers just as much as they can, while taking as much money out for the upper management and paper owners.
This is why there is so much hand-wringing about "China". Chinese companies WANT to give consumers a good deal, they still have a point to prove in high end manufacturing, and obviously the Chinese government would like strong companies they control to project power.
But there is no sign of change to counter this in the West.
Western markets and enconomies have been fully abused by powerful players, they barely pretend to act in the interest of consumers anymore.
Sure, but it _also_ means that protectionism is a valid lever to pull to counter it. It might not work, or it might not work _forever_, but it looks like the US got this half right.
Of course, one would hope the (US) government would use the time they bought their industry to try to catch up, rather than developing new V8 pickups.
I kinda think they should allow a few Chinese cars in. American manufacturers have no incentive to produce anything other than the massive, overpriced trash they've been producing.
The US bans affordable, quality Chinese EVs, but does not force US automakers build affordable EVs. And so, the tariffs are useless. They are a regressive consumer tax while China continues to scale EV production towards ~50M units/year (current manufacturing capacity) and US automakers profitmaxx with large, fuel inefficient combustion vehicles.
If legacy US auto is not scaling EV production, why are the tariffs still in place?
We don't need EVs. I drive one and like it and want to see more but underlying your comments here is a false assumption that if we don't build EVs we're falling behind or something. That's not correct.
While China has been scaling up it's production of vehicles, it'a also facing a 20% YoY decline in vehicle sales internally and thus has to look to export cars. It's currently shut out of the highly profitable and second largest (by volume, perhaps largest by $$) market and because of these factors and incoming EU action to prevent China from destroying the European auto industry faces companies who have built factories that were geared toward building 100,000s of thousands of vehicle but are only building a few thousand.
> If legacy US auto is not scaling EV production, why are the tariffs still in place?
Because your assumption is wrong. We don't need to scale EV production. Tariffs are in place because the engine and fuel source don't matter as much as having the industry does. While I also am in favor of competition, there's a balance to be had in maintaining good union jobs and preventing entire industries from collapsing due to all sorts of fair and unfair trade practices. It's the same approach the EU has broadly taken with its own products and market. The US is just playing catch up where it can or feels it needs to.
Falling behind in what, is the question. The race to electrify is because we're cooking the planet with fossil fuel usage, and electric cars are the future in which we don't choke ourselves out. Electrify transportation and move the grid to renewal resources. The economy is one thing but we only have one Earth.
See even this is an assumption. We don't need electric cars - we need to walk and bike (i.e. better building patterns). Creating EVs still creates emissions, you still have to mine the resources to make them, and you still use ships to transport then from China which aren't electrified. Using a lot of energy to drive a few miles to get a loaf of bread isn't sustainable no matter whether it's an EV, Hybrid, or ICE vehicle.
But if you think this is a big deal that needs to be solved (and I'm no opponent to saving the planet and reducing emissions or any of those things) my recommendation would first be to get China to release its hold on rare earth mineral processing, and then have them voluntarily give away EV and battery technology to other countries building cars so we can work on this problem together. Unfortunately China lost the trust of the western countries through its action and so we're sort of stuck in this situation because of them. None of the EU, Japan, Korea, or America are going to let their auto industry be destroyed and lose all of those good jobs just for the sake of the environment. It's a non-starter. If you think that's the approach to take you're probably wasting your time.
The world sells 90M units/year of light vehicles, as of this comment. You cannot stop people from buying light vehicles (broadly speaking; several countries have banned combustion vehicle imports already, and hopefully this trend continues). If they will be bought, they should be EVs. If they are not now, they will eventually be, based on current trajectories. 100% within ~10 years I think, maybe a bit longer. Legacy auto and nation states can protect their domestic markets only for so long, and countries without any domestic auto manufacturing are going to consume all of the cheap EVs China will build for them.
- “China’s electric vehicle exports continue to break records, and the surge in shipments to ASEAN markets is especially striking,” said Euan Graham, a Senior Electricity and Data Analyst (Global) at Ember. “Southeast Asia is fast becoming one of the most dynamic destinations for electric vehicles, and China is supplying that demand at scale and speed.”
- Singapore, 24 June 2026 – China’s electric vehicle exports reached a record $9.2 billion, up 49% year-on-year, in May 2026, according to new data from global energy think tank Ember. The previous record was in April 2026 at $9.1 billion.
- In May 2026, China shipped a record value of electric vehicles abroad, exceeding the previous monthly high set in April and underscoring the country’s dominance in global EV manufacturing. China exported around 448,000 electric passenger cars in May, roughly 279,000 battery-electric vehicles and 169,000 plug-in hybrids. EV exports have closed in on lithium-ion batteries as the largest of the “new three” cleantech export categories, having grown from under $1 billion a month in 2020.
- Exports to Southeast Asia reached an all-time high of $1.2 billion in May 2026, as ASEAN nations accelerated the electrification of their vehicle fleets. The surge was led by Thailand, which took a record of more than 36,000 Chinese electric cars in May, and the Philippines, where shipments climbed above 33,000 vehicles.
- "To decarbonize road transport, the world must move away from petrol and diesel cars towards electric vehicles and other forms of low-carbon transport. This transition has already started. In fact, global sales of combustion engine cars are well past their peak and are now falling. As you can see in the chart, global sales peaked in 2017. This is calculated based on data from the International Energy Agency. Bloomberg New Energy Finance also estimated this peak occurred around that time. Sales of electric cars, on the other hand, are growing quickly. They more than doubled in the three years from 2022 to 2025." [My note: Rate of change! Doubling in 3 years, and it is very likely the time it takes before next doubling continues to decline.]
Certainly, there is a place for mass transit, biking (including e-bikes!), and walking where possible. In lots of places, it isn't possible, and so EVs will be sold to folks who want them. The faster we can impair combustion vehicles sales, the faster we get to 100% EV sales. If you want mobility, electric only.
Yea it's fine that China builds electric bikes because that's not a manufacturing capacity that the west cares about. In the US and Canada at least we need better infrastructure so that more people are riding them, or manual bikes, or walking.
> Certainly, there is a place for mass transit, biking (including e-bikes!), and walking where possible. In lots of places, it isn't possible, and so EVs will be sold to folks who want them. The faster we can impair combustion vehicles sales, the faster we get to 100% EV sales. If you want mobility, electric only.
I also disagree that "in a lot of places it isn't possible". It is, actually. Most people live in urban areas and if we slightly adjust how we build and allow for proper levels of density then we don't even have to sell cars (which are a huge burden for the less wealthy).
There is no goal to get to 100% EV sales. If there is, I would support it as long as they're not Chinese. I'd rather buy another ICE vehicle than a Chinese EV because I care more about union jobs, American manufacturing capacity, and things like that than I do muddled visions of "if we just had EVs we would save the planet".
> Legacy auto and nation states can protect their domestic markets only for so long,
Well we can do it forever.
> and countries without any domestic auto manufacturing are going to consume all of the cheap EVs China will build for them.
Yea that's totally fine. The profitable customers though still remain in the west so if China wants to sell low priced EVs and follow the Android-ification strategy of gaining low-value market share I say more power to them. But we're not going to allow our jobs to go away and our industries to collapse. It's non-negotiable.
As your articles point out, China's increasing exports particularly to nearby countries which never had American markets to really begin with. I say that's a great thing for everyone. But you also have to acknowledge that the drive for Chinese exports is because of manufacturing overcapacity (this is a fact that can't be disputed) and because auto sales in China are falling (20% YoY) and their internal market is facing quite the challenge. But since we have auto industries we're not going to allow ours to collapse just to save Chinese jobs. It's nonsense.
> But we're not going to allow our jobs to go away and our industries to collapse. It's non-negotiable.
He said, in the thread "Mercedes-Benz to halt 'all future investments' in Germany." and while VW has ~100k layoffs planned. You say "allow it" like it is a choice. You can play to win, or lose, and western automakers are not currently playing to win. Maybe this changes! But probably not. It's easy to change, accept a reduction in profits and invest in EV production. But you're not keeping historical profits and winning, as a legacy automaker, as long as Chinese automakers are willing to make ~5% margins on their vehicles.
https://news.ycombinator.com/item?id=50484586 ("This is on the heels of VW also pulling out of Germany (as of just two days ago). VW is scrapping their biggest plant in Dresden and also shifting manufacturing to Eastern Europe and out of Germany for four other plants. German automakers can not longer remain competitive, for a few reasons.")
Certainly looks like the jobs are going away and the industries are collapsing, based on a preponderance of the evidence.
That's because auto sales collapsed in China [1] - did you forget the comment where I pointed out Chinese market sales are down 20% YoY across the board? - not because all of a sudden a bunch of Chinese EVs were imported. Volkswagen is working on building a massive new manufacturing facility in the US even [3].
Of course, the import of Chinese EVs would have an effect [2], and how the EU responds to that will be very interesting, but you're not looking at the broad picture and instead focusing on an ideological argument.
I am looking at the economics and trajectories, I'm unsure you think this is ideology. EV sales continue to rise, and China makes them, no other country is building EVs at this scale, and that is unlikely to change in the near term. Are EV sales globally going to go down? No, they are doubling every 2-3 years. Is China going to slow down building? No, they have to keep their exports humming. The world is their market, and they will sell into it forever (~90M units/year, as mentioned). Some countries may attempt or succeed at keeping them out, but the rest of the world will take the cheap EVs.
Do you disagree with this? My entire thesis is data, evidence, and observation driven. Are you arguing someone will build faster? If so, who? Provide evidence. Are you arguing protectionist policies? Sure, but only a few countries have auto manufacturing to protect, the rest of the world does not. So, where's the disconnect?
I've already explained in my posts above what the picture is. I don't really have anything else to say when you're just repeating what I've already walked through. Maybe someone else has some different insight. I hope you have a nice day!
My experience relates to Siemens who I'm not currently connected to in any way rather than MB but the issue there may be applicable to MB as well.
For decades, Siemens had excellent vertical relations with the German petrochemical, chemicals and materials industries who produced product ingredients that were world-beating on quality and price. The world caught up on quality and price to the point that BASF, Merck, Mayer etc were the inferior option when purchasing, destroying the competitiveness of everything downstream from them.
I don't know enough about Chinese automotive to say whether they've instead outcompeted MB on some other basis, but I do know for a fact that this one sector of the German miracle has gone away.
Seven years ago we had a moment at our (american manufacturing) company where we ordered Part A from our big name US manufacturer and through a connection we made on another project Part A from a no-name Chinese shop.
Not only was the Chinese part 75% cheaper, it also was higher quality.
We also have seen quite a few "domestic" manufacturers that are actually just slapping their label on Chinese made parts. Anyone whose attention snags on oddball stuff and gets things from China will know that distinct Chinese English font that only Chinese companies use. The source of the parts is pretty obvious when the QC stickers are in that font...
A key word is 'in Germany'. In case you cannot read the paywalled article, the problem (as I read elsewhere) is the high production costs in Germany because the wages are high compared to other countries.
MB has by far the worst leadership out of all German car brands
The new Porsche CEO definitely knows what he is doing, VW's core brand is also evolving well with the ID Polo, and even BMW has gotten something right with the Alpina acquisition and concept
Källenius on the other hand is responsible for the gigantic commercial flop that is the EQ series. He directed that before becoming CEO and then had to shut it down as CEO because people didn't see the cars as prestigious. And they are right. They look and feel like new Chinese brands. And don't even get me started on the new AMG GT. That is both a hideous and soulless car.
Exactly this, since the diesel scandal it is also legitimate to say that Mercedes and VW management is a criminal organisation. They have ruined both brands, taken insane money from German taxpayers and now they are leaving. It would have been nice if the government stopped supporting them earlier and rather helped ev startups flourish more.
Porsche's financials are trash because of their cancelled EV projects. After 12 years of half-assing electrification, it looks like BMW is really hitting it out of the park with the new i3/ix5/ix5.
The new Porsche CEO took over in January, the Mission S has been in development since ~ March and that is the first interesting new Porsche model in ages
Check the new cars, like the ID Polo, ID3 Neo and ID Cross. They've done a 180 on interior and fixed the exterior design language. It's one of the best interiors I've seen in a long time in entry level to midrange cars, and the way their CEO talked about it was refreshing.
This is the general mindset in Germany, atleast amongst people who follow new car releases. The ID Polo in particular will be a smash hit, I'm sure.
They say the difference between an optimist and a pessimist is that a pessimist says "It can't possibly get worse than this!", and an optimist says "sure it can!"
As someone living in Germany, I can totally see why. Electricity price is through the roof since the country phased out nuclear. It's one of the highest in the world in fact.
Also, the culture here is extremely risk averse. Add the layers of bureaucracy and the inability to move with time, I expect more and more large companies will succumb to a similar fate.
Germany absolutely needs reforms in multiple areas (bureaucracy and social welfare are probably the most pressing), unfortunately it's the same story in most of western Europe.
It feels that the political left doesn't want to see this, it seems that they're unable to see the forest through the trees. Lots of focus on specific topics, barely any holistic visions for the future of the country or the continent.
The political right is quick to blame the immigrants and while it's absolutely reasonable to have concerns about e.g the number immigrants receiving social welfare it's effectively a minor issue compared to the lack of economic growth or the absence of innovation.
There are many reasons for our high electricity costs but it's not the lack of nuclear power.
The price is mainly driven by the most expensive power source required to fulfil demand. Nuclear was not the most expensive source, even though it's more expensive than renewables. Usually, gas peakers are the issue, and we could save a lot of money by replacing them with battery storage.
The last nuclear power plant was shut down in April 2023 and the next month, electricity became cheaper. In April 2024, it was much cheaper.
We have a problem with both electricity and gas at the moment. This is very bad news for chemical industry, which is already collapsing. The chemical cluster in Sachsen-Anhalt, Mitteldeutsches Chemiedreieck is dying rapidly, layoffs are regular in that area and this is now a voter pump for AfD. The weakness of the whole sectors of economy is now going to cascade downstream, unless the war stops and gas starts coming back, because there is no way Germany can restructure economy in a very short period of time with the current or any future government.
I think gas is about six times as expensive for industrial use in Germany as it is in Texas/Louisana. If you’re running a chemical plant where gas is a primary input it’s hard to see how you could be remotely competitive even with better technology/higher quality etc.
Is the industry not profitable with gas imported from sources other than Russia? Other countries (e.g. Japan) have large industries, including chemical industries, fueled by relatively expensive LNG from Arab States (or USA), what's different about Germany?
Unsurprisingly, export manufacturing based economies are all facing the same decline.
As they lost their special know hows, the advantages are now in the hands of who invests more, diversifies more, has less bureaucracy and is more risk prone.
Labor cost in the east is a fraction of Germany. A Chinese factory worker is gonna work 50h/week for under 20k/year, instead of 35h/w for more than twice that.
But of course it has to be the fact that they pay like 30 bucks less per MWh in China that makes it impossible to compete. German nuclear exit is most certainly the main factor here /s.
"It is difficult to get a man to understand something, when his salary depends upon his not understanding it"
I'd say both are true. Electricity prices are killing supply of components and materials from upstream, supply chain gets longer and significantly more expensive, if you ship from India or China instead of Halle.
And thanks to war in Iran, shipments on that distance are now incredibly expensive (5x more expensive than before, as I heard).
Germany used to export cars and import profits. Not it is exporting its factory capital and importing Chinese EVs / batteries. This would hollows out the domestic parts suppliers in a long-run.
Their whole strategy is selling luxury cars in China, without an afterthought on what might happen if that market changes in any way. Now, they don't know what to do. At the same time, they destroyed their image. Instead of being the most reliable car, they transformed themselves in a luxury brand.
Before I read your comment, I had no idea they were once considered reliable cars (until the 90s?). I remember people mocking their reliability issues and owners groaning about repair costs for the last 25 years.
For a long time the Mercedes E class was the taxis car. Reliable as hell. There was also a saying akin to "the last car will be a mercedes", meaning the last car you buy in life will be a mercedes because it will outlast you. That changed heavily in the late 90s and 00s.
Oh, I had forgotten I had an active FT subscription with everything else going on in the world.
> Mercedes-Benz has decided to halt “all further investments” in Germany and warned that plant closures were now an option, marking an escalation of its stand-off with unions in a bid to reduce labour costs.
> The German premium carmaker has called for longer working hours without extra pay to boost productivity but has failed to reach a deal with its works council despite four months of negotiations.
> In an interview with board members published on the company’s intranet on Thursday, its production head Michael Schiebe said “the current cost structures do not allow us to invest in Germany”.
The article is short and sweet, so I’m wary of copying all of it. It goes on to explain:
* A 35-hour work week is the norm in Germany for automakers, and MB is asking their workforce to change to 40.
* Rising competition for cheaper Chinese automakers is placing new economic pressures on MB.
This is definitely not true. Whether you are looking at medieval societies, hunter gatherer societies, or established modern societies, there are clear examples where people had more leisure time.
In the simplest possible case, back in the 1950s, most households had one paid worker. Today, most households have two paid workers. The per worker number of hours remained flat, but the per adult number of hours worked skyrocketed.
Pre agricultural societies typically worked less.
Medieval peasants worked long days, but it was highly seasonal, and was limited by light. They worked ~1500 hours a year, and put another 5-800 hours into domestic work. Modern Americans will be very familiar with about 1800 hours of labor a year, plus 5-600 hours domestic labor. Plus significantly more errands and transit stacking on a few hundred hours a year. Most Americans push close to 2600 hours a year. But it can go much higher if you factor in childcare (largely kids in medieval times were put to work).
So, your claim of more leisure time is definitely incorrect.
We definitely have better leisure time. And our social safety nets are better (though declining as of late). Quality of life is higher for sure. I'm solely objecting to the claim we have more leisure time.
> In the simplest possible case, back in the 1950s, most households had one paid worker.
In 1950s, most households were in subsistence agriculture, where both spouses worked more or less around the clock. On in a couple wealthiest countries of the world, where minority of population lived, the situation was different.
It could also be said that during the 1950's, in a couple of the wealthiest countries in the world, one spouse worked more or less around the clock and the other worked for about 8 hours...
I agree with you. Household labor IS labor. However in the world where both spouses moved to working for a wage, those 8 hours of housework do not disappear. They still need to get done, they just come from both spouses leisure time now.
He'd have tried to cut dead weight bodies off the payroll rather than give a crap whether any particular body is on the clock 30hr or 60hr.
Trying to get your manufacturing employees to show up more so you can make more money on the fixed costs (benefits, training, etc) is to put a baindaid on a bullet hole that is the modern big enterprise as it exists in the modern economy.
He was given the highest civilian award available from Nazi Germany--more than just antisemitic (which you are right on), but I understand you didn't mean politically. Thanks for the clarification
Only 6.4% of institutional and strategic investors are based in Germany. 34.5% are retail investors, and 20% of the German population owns any shares (of any company) at all. So most investors of Mercedes don't have any particular reason to invest in Germany.
FTA: it looks like their sales figures in China have slumped quite a bit. As a car guy, apocryphally, it seems the major German brands have spent a lot of time and resources realigning their offerings to that market (at the expense of their other markets), and now that Chinese manufacturers are putting out some genuinely great cars for much cheaper, are reaping the costs of that decision.
I'm guessing cultural adaptations like supposedly Mercedes had to do when reaching the north American market and had to add a cup holder because everyone has the habit of taking a coffee in the morning while driving to work.
They had created tooling for cars with longer wheelbases because apparently having a larger back seat area is sought after in China. The design language also apparently was intended to appeal to Chinese buyers (I'm less sure on this, but notably the design language of both BMW and MB changed pretty dramatically in the last 10 years).
German car manufactures are under pressure for some time now (Chinese competition, Trump's tariffs, bad decisions).
They want to reduce cost and the obvious way to do that, is to reduce the work force.
That's not an easy thing to do in Germany, because unions and the worker's council are quite powerful.
That production is too expensive in Germany (and therefore halting investments), may be true or not, but stating it officially like in this announcement is mainly a method for forcing concessions from the worker's council.
Have you been living under a rock? The US warned Merkel, many years ago, to not be entirely dependent on Russia for energy.
Then Germany took the dumbfucktarded decision ever: they shut down all their nuclear power plants and they decided to become ultra-reliant on Russia.
In addition to that, the EU took another deeply fucktarded decision: they fucked up the timeline to "move to EV", by giving only 14 years (which is basically development cycles for only two generations of cars in Germany) to German manufacturers to move to 100% EV.
When european car manufacturers were nowhere when it came to EV cars.
So german (and french: and the number in France are terribly bad too) car manufacturers were forced not only to move to EV in a crazy hurry while their know-how was in ICE, but in addition to that due to closing nuclear plants and Russia beginning a war, energy prices rose like mad.
At some point energy price for car manufacturers was 7x higher than in China.
How do you want german car manufacturer to compete when both their own politicians and the EU as a whole teamed to destroy them?
That's what happened: instead of giving a reasonable timeline to move to EV (14 years was way too short and, btw, the EU did move the timeline a bit further now: but they realize too late they were wrong and did too little), the EU made sure energy price rose like mad.
The EU killed the french and german car industry. That's what happened.
Recently the CEO of Airbus explained in front of politicians that if France and the EU kept doing what it was doing, Airbus would suffer the same fate as the french car industry.
When ultra dumb decisions like this are taken, the consequences take some time to show up. First you need a full cycle of development for a new car, then you've got a company like, say, Porsche producing the shittiest Porsche ever, the Taycan, in a seven years development cycle. Then everybody realizes it's a piece of shit and customers want, from Porsche, a 911.
Then you've got even more dumbfucktarded decision: like the Porsche Macan ICE being the absolute best selling Porsche model. And Porsche decide to stop selling ICE Macan and start selling only 100% EV Macan. With batteries shittier than on Tesla or chinese cars.
And so Porsche's benefits, YOY, dropped... 93%.
Ninety-three percent revenu drop.
It's the same for all german car manufacturers: VW is in deep shit, Mercedes is in deep shit, Porsche is in deep deep shit.
And we have to thank the EU bureaucrats for that.
I'm not saying german car manufacturers had to keep selling ICE forever: I'm saying the EU should have made sure they had competitive energy prices for their factories and they should have been given more time for their switch to EV.
P.S: as a sidenote in France while workers at french car manufacturing companies were all concerned about their safety nets and social security and social rights etc., they didn't think that all that wouldn't matter as they'd find themselves completely out of their jobs instead due to the dumb decisions of EU bureaucrats (who seem to be in a hurry to destroy the EU as quickly as they can).
> (14 years was way too short and, btw, the EU did move the timeline a bit further now: but they realize too late they were wrong and did too little)
5 years of those 14 have now passed, and while it's true 5y ago they were nowhere to be found on the radar, they are still churning out cars like it's 1980 after 30% of the usable timeline is gone. The boards have no vision how to perform the switch to electric or how to play in an ultra-competitive market where it takes now 2 years from design to selling instead of the usual 10. Otherwise something would have been done by now, like securing some battery supply chain agreements, building fabs or ensuring to give people what they wanted (~500km range for a C segment car). Instead the ID.Polo starts at 23k with 330km range, and we'll still see about reliability, performance and software. Heck, Tesla Berlin took 3 years from breaking ground to mass production, and they still can't make something competitive with the Model 3.
I imagine nothing would have happened for another 10y if the timeline were longer. I believe the intent of the EU was to set a clear direction to follow and to push the industry to go for it, instead the dinosaurs keep finding excuses to protect the status quo and play by the old rules.
I agree with the points about cheap, clean and renewable energy that should have supported this.
>Then Germany took the dumbfucktarded decision ever: they shut down all their nuclear power plants and they decided to become ultra-reliant on Russia.
Shutting down the nuclear plants before coal was stupid, but did not make Germany ultra-reliant on Russia. There were plenty of other sources of fossil fuels (Netherlands, Norway Middle East). Unlike gas/oil, Germany is still importing uranium directly from Russia btw.
>When european car manufacturers were nowhere when it came to EV cars.
The decision to phase out ICE in the EU was made in 2022, deliveries of the VW ID.3 started in 2020, and that wasn't the first European EV by a long shot. Sure the vast majority of Europe's car manufacturing was still geared for ICEs, but that statement is wildly inaccurate.
With the rise of China as the place that can manufacture just about anything it is going to be very hard for labor to have power anywhere else in the world because they can just threaten to move their manufacturing to China.
Due to unions in Germany labor costs are "too high." Mercedes-Benz, known for it's affordability, is worried about it's customer base balking at the cost of it's products.
Or they're just anti-labor, greedy, turds.
The EU is pushing EVs extremely hard, extremely quickly.
At the same time, China is much better at EVs, and they're sold freely in Europe for less than the Euro carmakers can build them for.
It's a perfect storm. The carmakers are caught in the middle. They have to quickly and radically transform their product portfolio away from what they know, to something they don't know, AND they have to find a way to charge way less for it.
If you compete on global markets, you inevitably compete with global wage levels, and somewhat comparable talent in China demands not even 50% of the wage it would get in Germany.
There is a reason that new car production has been shifting towards lower wage countries for decades now (US=>Mexico, Europe Central=>East).
This situation is gonna get better for countries like Germany once Chinese wage levels have somewhat caught up, but that might still take a while, and other big currently industrializing lower-wage countries might take over that role (like Indonesia or India).
> Workers in China and Vietnam work 35 hours A DAY
You kid but when you add up the amount of time a western BigCo worker spends in BS mandatory meetings and trainings and other BS that they don't care about, isn't productive and comes down from above in some misguided attempt to polish the statistics I bet the guy in China is actually spending a lot more time on task.
China is killing Germany's car production and has been
for a while. It is now just much more obvious, even
quality-wise, which used to be a stronghold foundation
of german engineering. Expanding eastwards and cutting
costs is a losing strategy for Germany - there is a
reason why the AfD is gaining momentum, despite their
addiction to ultra-right thoughts. Meanwhile, incompetent
people such as Merz (old guy, talks big, acts little)
fail hard when they meet reality. Guy is now sinking
Germany quickly and he has no decency to want to step
back and let more competent people at the least try to
fix Germany. Meanwhile France is going closer towards
bankruptcy. To some extent this is similar to the 1930s
era, also aided by Trump cronies and the Putin mafia.
Germany but also the whole EU, needs to completely
reconsider what it really wants; and how it plans to
achieve that. The china dictatorship makes much more
logical decisions - not in all areas, of course, but
they pursue a strategy. Systematically. The EU does
not really do that. They just claim they do but in
reality they do not. Green energy is fine and dandy
but if the prices keep on rising, inflation rises as
well, then something does not work with that promise.
Not like 1930s. They arent bankrupting themselves paying WW 1 reparations and bread is not jumping by a million marks every week. This is more like Japan post the good times. Some corps and people will take the hit because they cant compete. Firms that survive will be the ones that find new ways of doing things. People waiting for politicians/political parties to save them are misguided and blind to how many global factors no one has any control over.
TLDR; they didn’t invent anything new in the past 30 years and now Chinese and others caught up on them. It’s hard to maintain the luxury price if your product doesn’t offer anything different and the performance is mediocre.
Article is pay walled but if the headline is true that's tragic. I wonder if they're going to invest elsewhere or just admit defeat and slowly wind down the business.
I can't help but think this was influenced somewhat by the shutdown of Germany's nuclear reactors thus making energy more expensive and all the knock on effects.
Mercedes-Benz turned a net profit of $5.3 billion last year. Even if they had had a bad year, they would have assets - tangible and intangible - and potential for turning things around. There's plenty of stakeholders with, well, stakes in the business and incentives to see it do well.
How does one come to wonder if they are going to "slowly wind down the business"?
"We're stopping investing in the business" is usually synonymous with "growth ran out and we have no idea what to do besides hope and pray and eventually go bankrupt"
basically, management is in a standoff with the unions about working more than 35 hours without paying for it, they also don't want to pay holiday bonuses.
Citing high production costs, they are looking to the US and want to bring costs in Germany down to the production costs in the US.
Nothing about what cuts the management is willing to take.
> Citing high production costs, they are looking to the US and want to bring costs in Germany down to the production costs in the US.
Which is funny since both are much higher than China. These lagging car industries will only be able to be protected for so long from Chinese EVs like BYD.
> I can't help but think this was influenced somewhat by the shutdown of Germany's nuclear reactors thus making energy more expensive and all the knock on effects.
The shutdown had no effect on energy prices in Germany.
Yeah, the paywall is questionable - I don't think I'd read them enough to be worth paying the price even though I understand they need to make money...
My bet (edit: reading other comments I'm glad I didn't put money on it... leaving this comment anyway) based on other cases of this is they are fighting a law (or several laws), and are making this threat as a "change the law to favor us or we will leave and this prove you need us more than we need you".
I don't know how it will work out for them, I've seen it go both ways. I've also seen this stop some really stupid laws, and also stop some really good laws. Without knowing details of what they are trying to do I can't comment on which side I support.
MB is complaining that they can't force the union workers to work longer days without extra pay. They are also complaining that Chinese automakers are selling well in Europe and are much cheaper to build. The second complaint is completely valid, I don't see how domestic auto making can survive when you can pick up a BYD for much less.
I think that energy prices are just a part of the root cause.
The other parts are:
1. German producers really fucked up with the "electric" revolution and were caught a bit with their pants down by Tesla and especially the Chinese brands.
2. Specific to Mercedes-Benz, I believe the brand failed to attract younger buyers. Personally, I associate Mercedes cars with boomers/older genX folks.
3. Price. In a moment in which affordability is a major issue for the majority of people, the base model of the cheapest car (the A class) starts from 42900 CHF.
It seems they are not going to give in to the demand from unions in Germany. To prove their point, they are announcing the consequences of having a workforce that is overpaid and no longer know what real work feels like. German workers need that wake up call if they don’t want to become a third world country.
A quick google shows they make about 45k/year (pre-tax). Even for Germany that is not a lot of money. That is less than the median Germany salary. Mercedes is asking them to work 40h/week without an increase in monthly pay. Who would accept that without a fight? Mercedes does not build cheap cars, I am sure they can afford reasonable pay. Have you worked in car manufacturing? Do you know what "real work" feels like?
That may well be true, but they don't have to compete with median german salaries, they have to compete with eastern European/Chinese ones (where a lot of car production already is).
And a factory worker in China makes <$20k/year, and will be easily convinced to work longer than 35h/week.
It's not an issue of how much anyone feels they ought to be paid.
German automakers are simply shifting production to eastern Europe, where there are skilled autoworkers who will happily make cars for 4X less the cost of labor vs. German labor.
This is true. Firing lazy workers are super difficult here. So the wage doesn't move and people with a cushy job do whatever the hell they want without any consequences.
No, that analysis is wrong. You try to blame it on the workers.
While it is true that the work cost is higher than in Poland, even
though Poland closed the gap immensely in the last 10 years, the
issue is much more deeply rooted. There is no way Germany can now
compete with China. This happened to the USA too, decades before,
see how Detroit collapsed. China kind of copied the Japanese and South Korean variant while massively upsizing all of that, including integrating key aspects into their work flows. You only need to look at robot factories. You won't find that in Germany much at all. The innovation changed completely.
Mercedes-Benz just tries to shift the blame to lower costs, which
is understandable from their point of view, but does not fix the
core problem. Even building in Poland or Romania, won't fix the
issue with regards to China. That's not the fault of the workers
primarily.
I'm relatively certain Detroit collapsed because their vehicles were junk. The entire reason why 70s era vehicles are so easy to keep running today, is it took just as much work back then to keep them going.
By stopping import of Russian gas, yes, there is no way to compete with China.
Imported natural gas used to cost Germany roughly €12 per megawatt-hour (MWh) at the border
Now wholesale prices have climbed to around €60+ per MWh, roughly FIVE times higher than previous levels.
That's goodbye to Industry in Germany - well except for the War Industry which has state protection and funding and doesn't need to be competitive. And China has become even more cheaper since they pay far less for Russian gas.
I don't know why the very bright guys here on HN have such HARD blinkers on correlation and causation between energy prices and energy-intensive industry. Even Merz himself finally admitted it this year but most HN posters want to put their high-IQ heads into cement rather than admit that stopping Russian gas was one the main causes of the downfall of German industry.
Workers shouldnt have to live poorly so you can buy a cheap German car. The reality as the GDP goes up and wealth and wages go up, you can no longer compete in manufacturing compared to poorer countries. This is how capitalism works. Blaming the workers is entirely wrong. Everyone who works should have a good wage. Germany is just experiencing what the US experienced 20-30 years ago when it admitted its best moving a lot of manufacturing overseas. Near everything you own is made in these poorer countries, but that's not a problem, but somehow when it comes to cars, people take offense.
Until we achieve worldwide socialism where it doesnt matter what is made where, this is how its going to be. National borders will dictate economics and what is best done in those countries. The wealthy west simply cannot compete on manufacturing anymore.
> Workers shouldnt have to live poorly so you can buy a cheap German car.
Have you looked at the prices of German cars? Nobody ever called them cheap. Germany exports mostly luxury vehicles, while paying their workers a pittance. As China car manufacturers move up the quality scale, they will eat up whatever marketshare German cars have.
yes for sure it's the fault of the lazy overpaid workers not the decisions made by management. and this germany has to wake up narrative is the same that comes from the right wing politicians. so i would call this bs.
This is on the heels of VW also pulling out of Germany (as of just two days ago). VW is scrapping their biggest plant in Dresden and also shifting manufacturing to Eastern Europe and out of Germany for four other plants. German automakers can not longer remain competitive, for a few reasons.
Part of this is due to declining sales in China (driven by competitive domestic EVs there), and a large part is due to the political and regulatory envornoment in the EU/Germany: these automakers are being forced to electrify as ICE vehicles are banned as of 2035, cost of labor in Germany in 4-5x what it is in eastern europe[1], electricity and gas prices (for manufacturing) are through the roof, and VW itself is 20% controlled by the state and being hamstrung by that a bit as well.
[1]MB head of production: "The cost of one hour of labour in production in Germany is in some cases up to five times higher than at locations in Eastern Europe." VW cost of labor per vehicle: 4,850eur in Emden plant vs 1,078eur in Tianjin plant. Sources https://www.electrive.com/2026/11/13/mercedes-board-threaten... https://x.com/stats_feed/status/2109219150157471938
> cost of labor in Germany in 4-5x what it is in eastern europe
Is that really true ? I would say maybe 2x but 4-5x - where are wages that low in Europe anymore ?
(Assuming those numbers are roughly correct) there are probably multiple factors that contribute to the overall delta, possibly including: holiday, sick leave, and maternity leave entitlement, time spent on non-core activities like union or workers rights matters, employer contributions to health insurance, limitations on hours and/or overtime, various taxes, meeting culture, general work culture, etc.
There a line of thinking in Germany that the country worked hard to build itself up post-WW2 and it should now be able to enjoy the rewards. Unfortunately the rest of the world moved on, and all of Germany’s excellent and hard-won prosperity and rights make it less competitive globally.
I provided sources, the company itself and two different German journalists. If you find another source lmk
VW has famously ridiculous wages
Germany is gonna be slapped hard because it's car manufacturers bet heavily on "combustion engines" and being THE "luxury brand" in China in 2016 when everyone could see what direction the hockey puck was going.
EVs were the future then and especially now. German car manufactures placed poor bets.
Exactly. Robert Habeck, then co-leader of Germany's Green Party, made precisely this point to VW CEO Herbert Diess back in 2019 [1]:
> If you don't offer an electric car for under €20,000 by 2025, then I'm afraid you will fail in the market.
And that's what we're seeing now. Even with protective import tariffs, Chinese EVs can offer better quality and features at a lower price.
Isn't that a dream for the government? They get to claim they 'protected jobs' with the tariffs. The government ironically taxes the middle class when they purchase a vehicle via those mechanisms and keeps the money.
If your business and/or nation state culture doesn't support innovation, it must be punished via outcomes. Incentives drive outcomes.
It's humorous when folks argue that China subsidized their core industries. Of course they do, that is their culture, and aligns with their target outcomes. This is why they are a leader in the vast majority of frontier technologies [1]. They are not going to tie their hands because wealthy developed nations demand they do for silly economic configurations.
"Great Allocators of Capital" are maybe not so great after all. Maybe they were just lucky until they weren't.
[1] https://news.ycombinator.com/item?id=45496507 (citations)
August 2024:
> Now covering 64 critical technologies and crucial fields spanning defence, space, energy, the environment, artificial intelligence (AI), biotechnology, robotics, cyber, computing, advanced materials and key quantum technology areas, the Tech Tracker’s dataset has been expanded and updated from five years of data (previously, 2018–2022) to 21 years of data (2003–2023).
> These new results reveal the stunning shift in research leadership over the past two decades towards large economies in the Indo-Pacific, led by China’s exceptional gains. The US led in 60 of 64 technologies in the five years from 2003 to 2007, but in the most recent five years (2019–2023) is leading in seven. China led in just three of 64 technologies in 2003–2007 but is now the lead country in 57 of 64 technologies in 2019–2023, increasing its lead from our rankings last year (2018–2022), where it was leading in 52 technologies.
Indeed, if China "subsidising" their industry is working so well, why don't Western countries do it...
Right... they are too busy selling state assets or allowing local corporations to be taken by private equity or sovereign wealth funds. Which then run them for the benefit of shareholders, or the new owner directly.
Western companies don't exist to provide what consumers want and give them a fair deal anymore. They exist to screw consumers just as much as they can, while taking as much money out for the upper management and paper owners.
This is why there is so much hand-wringing about "China". Chinese companies WANT to give consumers a good deal, they still have a point to prove in high end manufacturing, and obviously the Chinese government would like strong companies they control to project power.
But there is no sign of change to counter this in the West.
Western markets and enconomies have been fully abused by powerful players, they barely pretend to act in the interest of consumers anymore.
Nailed it. Strongly agree. Do I prefer grifters? Or builders? I prefer builders, so I am a fan of China's approach.
https://ember-energy.org/data/china-cleantech-exports-data-e...
Sure, but it _also_ means that protectionism is a valid lever to pull to counter it. It might not work, or it might not work _forever_, but it looks like the US got this half right.
Of course, one would hope the (US) government would use the time they bought their industry to try to catch up, rather than developing new V8 pickups.
I kinda think they should allow a few Chinese cars in. American manufacturers have no incentive to produce anything other than the massive, overpriced trash they've been producing.
The US bans affordable, quality Chinese EVs, but does not force US automakers build affordable EVs. And so, the tariffs are useless. They are a regressive consumer tax while China continues to scale EV production towards ~50M units/year (current manufacturing capacity) and US automakers profitmaxx with large, fuel inefficient combustion vehicles.
If legacy US auto is not scaling EV production, why are the tariffs still in place?
https://ember-energy.org/data/ev-sales-tracker/
https://en.wikipedia.org/wiki/The_purpose_of_a_system_is_wha...
We don't need EVs. I drive one and like it and want to see more but underlying your comments here is a false assumption that if we don't build EVs we're falling behind or something. That's not correct.
While China has been scaling up it's production of vehicles, it'a also facing a 20% YoY decline in vehicle sales internally and thus has to look to export cars. It's currently shut out of the highly profitable and second largest (by volume, perhaps largest by $$) market and because of these factors and incoming EU action to prevent China from destroying the European auto industry faces companies who have built factories that were geared toward building 100,000s of thousands of vehicle but are only building a few thousand.
> If legacy US auto is not scaling EV production, why are the tariffs still in place?
Because your assumption is wrong. We don't need to scale EV production. Tariffs are in place because the engine and fuel source don't matter as much as having the industry does. While I also am in favor of competition, there's a balance to be had in maintaining good union jobs and preventing entire industries from collapsing due to all sorts of fair and unfair trade practices. It's the same approach the EU has broadly taken with its own products and market. The US is just playing catch up where it can or feels it needs to.
Falling behind in what, is the question. The race to electrify is because we're cooking the planet with fossil fuel usage, and electric cars are the future in which we don't choke ourselves out. Electrify transportation and move the grid to renewal resources. The economy is one thing but we only have one Earth.
See even this is an assumption. We don't need electric cars - we need to walk and bike (i.e. better building patterns). Creating EVs still creates emissions, you still have to mine the resources to make them, and you still use ships to transport then from China which aren't electrified. Using a lot of energy to drive a few miles to get a loaf of bread isn't sustainable no matter whether it's an EV, Hybrid, or ICE vehicle.
But if you think this is a big deal that needs to be solved (and I'm no opponent to saving the planet and reducing emissions or any of those things) my recommendation would first be to get China to release its hold on rare earth mineral processing, and then have them voluntarily give away EV and battery technology to other countries building cars so we can work on this problem together. Unfortunately China lost the trust of the western countries through its action and so we're sort of stuck in this situation because of them. None of the EU, Japan, Korea, or America are going to let their auto industry be destroyed and lose all of those good jobs just for the sake of the environment. It's a non-starter. If you think that's the approach to take you're probably wasting your time.
The world sells 90M units/year of light vehicles, as of this comment. You cannot stop people from buying light vehicles (broadly speaking; several countries have banned combustion vehicle imports already, and hopefully this trend continues). If they will be bought, they should be EVs. If they are not now, they will eventually be, based on current trajectories. 100% within ~10 years I think, maybe a bit longer. Legacy auto and nation states can protect their domestic markets only for so long, and countries without any domestic auto manufacturing are going to consume all of the cheap EVs China will build for them.
Ember Energy: China’s EV exports hit record $9.2 billion in May as ASEAN demand surges - https://ember-energy.org/latest-updates/chinas-ev-exports-hi... - June 24th, 2026
- “China’s electric vehicle exports continue to break records, and the surge in shipments to ASEAN markets is especially striking,” said Euan Graham, a Senior Electricity and Data Analyst (Global) at Ember. “Southeast Asia is fast becoming one of the most dynamic destinations for electric vehicles, and China is supplying that demand at scale and speed.”
- Singapore, 24 June 2026 – China’s electric vehicle exports reached a record $9.2 billion, up 49% year-on-year, in May 2026, according to new data from global energy think tank Ember. The previous record was in April 2026 at $9.1 billion.
- In May 2026, China shipped a record value of electric vehicles abroad, exceeding the previous monthly high set in April and underscoring the country’s dominance in global EV manufacturing. China exported around 448,000 electric passenger cars in May, roughly 279,000 battery-electric vehicles and 169,000 plug-in hybrids. EV exports have closed in on lithium-ion batteries as the largest of the “new three” cleantech export categories, having grown from under $1 billion a month in 2020.
- Exports to Southeast Asia reached an all-time high of $1.2 billion in May 2026, as ASEAN nations accelerated the electrification of their vehicle fleets. The surge was led by Thailand, which took a record of more than 36,000 Chinese electric cars in May, and the Philippines, where shipments climbed above 33,000 vehicles.
https://ourworldindata.org/data-insights/global-sales-of-com...
- "To decarbonize road transport, the world must move away from petrol and diesel cars towards electric vehicles and other forms of low-carbon transport. This transition has already started. In fact, global sales of combustion engine cars are well past their peak and are now falling. As you can see in the chart, global sales peaked in 2017. This is calculated based on data from the International Energy Agency. Bloomberg New Energy Finance also estimated this peak occurred around that time. Sales of electric cars, on the other hand, are growing quickly. They more than doubled in the three years from 2022 to 2025." [My note: Rate of change! Doubling in 3 years, and it is very likely the time it takes before next doubling continues to decline.]
https://en.wikipedia.org/wiki/Phase-out_of_fossil_fuel_vehic...
Certainly, there is a place for mass transit, biking (including e-bikes!), and walking where possible. In lots of places, it isn't possible, and so EVs will be sold to folks who want them. The faster we can impair combustion vehicles sales, the faster we get to 100% EV sales. If you want mobility, electric only.
The world’s 280 million electric bikes and mopeds are cutting demand for oil far more than electric cars - https://theconversation.com/the-worlds-280-million-electric-... - November 16th, 2023
280 million e-bikes are slashing oil demand far more than electric vehicles - https://arstechnica.com/cars/2023/11/280-million-e-bikes-are... - November 11th, 2026
(where are these ebikes built? China)
> (where are these ebikes built? China)
Yea it's fine that China builds electric bikes because that's not a manufacturing capacity that the west cares about. In the US and Canada at least we need better infrastructure so that more people are riding them, or manual bikes, or walking.
> Certainly, there is a place for mass transit, biking (including e-bikes!), and walking where possible. In lots of places, it isn't possible, and so EVs will be sold to folks who want them. The faster we can impair combustion vehicles sales, the faster we get to 100% EV sales. If you want mobility, electric only.
I also disagree that "in a lot of places it isn't possible". It is, actually. Most people live in urban areas and if we slightly adjust how we build and allow for proper levels of density then we don't even have to sell cars (which are a huge burden for the less wealthy).
There is no goal to get to 100% EV sales. If there is, I would support it as long as they're not Chinese. I'd rather buy another ICE vehicle than a Chinese EV because I care more about union jobs, American manufacturing capacity, and things like that than I do muddled visions of "if we just had EVs we would save the planet".
> Legacy auto and nation states can protect their domestic markets only for so long,
Well we can do it forever.
> and countries without any domestic auto manufacturing are going to consume all of the cheap EVs China will build for them.
Yea that's totally fine. The profitable customers though still remain in the west so if China wants to sell low priced EVs and follow the Android-ification strategy of gaining low-value market share I say more power to them. But we're not going to allow our jobs to go away and our industries to collapse. It's non-negotiable.
As your articles point out, China's increasing exports particularly to nearby countries which never had American markets to really begin with. I say that's a great thing for everyone. But you also have to acknowledge that the drive for Chinese exports is because of manufacturing overcapacity (this is a fact that can't be disputed) and because auto sales in China are falling (20% YoY) and their internal market is facing quite the challenge. But since we have auto industries we're not going to allow ours to collapse just to save Chinese jobs. It's nonsense.
> But we're not going to allow our jobs to go away and our industries to collapse. It's non-negotiable.
He said, in the thread "Mercedes-Benz to halt 'all future investments' in Germany." and while VW has ~100k layoffs planned. You say "allow it" like it is a choice. You can play to win, or lose, and western automakers are not currently playing to win. Maybe this changes! But probably not. It's easy to change, accept a reduction in profits and invest in EV production. But you're not keeping historical profits and winning, as a legacy automaker, as long as Chinese automakers are willing to make ~5% margins on their vehicles.
https://news.ycombinator.com/item?id=50484586 ("This is on the heels of VW also pulling out of Germany (as of just two days ago). VW is scrapping their biggest plant in Dresden and also shifting manufacturing to Eastern Europe and out of Germany for four other plants. German automakers can not longer remain competitive, for a few reasons.")
Certainly looks like the jobs are going away and the industries are collapsing, based on a preponderance of the evidence.
That's because auto sales collapsed in China [1] - did you forget the comment where I pointed out Chinese market sales are down 20% YoY across the board? - not because all of a sudden a bunch of Chinese EVs were imported. Volkswagen is working on building a massive new manufacturing facility in the US even [3].
Of course, the import of Chinese EVs would have an effect [2], and how the EU responds to that will be very interesting, but you're not looking at the broad picture and instead focusing on an ideological argument.
[1] https://apnews.com/article/cars-china-economy-europe-sales-d...
[2] Welcome to find another source but this one says Chinese EV penetration is less than 10% https://www.evchina.co/news/chinese-ev-sales-europe
[3] https://www.theguardian.com/business/2026/oct/25/volkswagen-...
I am looking at the economics and trajectories, I'm unsure you think this is ideology. EV sales continue to rise, and China makes them, no other country is building EVs at this scale, and that is unlikely to change in the near term. Are EV sales globally going to go down? No, they are doubling every 2-3 years. Is China going to slow down building? No, they have to keep their exports humming. The world is their market, and they will sell into it forever (~90M units/year, as mentioned). Some countries may attempt or succeed at keeping them out, but the rest of the world will take the cheap EVs.
Do you disagree with this? My entire thesis is data, evidence, and observation driven. Are you arguing someone will build faster? If so, who? Provide evidence. Are you arguing protectionist policies? Sure, but only a few countries have auto manufacturing to protect, the rest of the world does not. So, where's the disconnect?
I've already explained in my posts above what the picture is. I don't really have anything else to say when you're just repeating what I've already walked through. Maybe someone else has some different insight. I hope you have a nice day!
My experience relates to Siemens who I'm not currently connected to in any way rather than MB but the issue there may be applicable to MB as well.
For decades, Siemens had excellent vertical relations with the German petrochemical, chemicals and materials industries who produced product ingredients that were world-beating on quality and price. The world caught up on quality and price to the point that BASF, Merck, Mayer etc were the inferior option when purchasing, destroying the competitiveness of everything downstream from them.
I don't know enough about Chinese automotive to say whether they've instead outcompeted MB on some other basis, but I do know for a fact that this one sector of the German miracle has gone away.
Seven years ago we had a moment at our (american manufacturing) company where we ordered Part A from our big name US manufacturer and through a connection we made on another project Part A from a no-name Chinese shop.
Not only was the Chinese part 75% cheaper, it also was higher quality.
We also have seen quite a few "domestic" manufacturers that are actually just slapping their label on Chinese made parts. Anyone whose attention snags on oddball stuff and gets things from China will know that distinct Chinese English font that only Chinese companies use. The source of the parts is pretty obvious when the QC stickers are in that font...
Do you mean the Chinese parts were 1/4 the price or 3/4 the price of the domestic parts?
75% discount.
Quality, value, electrification, and worker productivity are all angles where Mercedes Benz has lost to Chinese or Japanese brands.
A key word is 'in Germany'. In case you cannot read the paywalled article, the problem (as I read elsewhere) is the high production costs in Germany because the wages are high compared to other countries.
MB has by far the worst leadership out of all German car brands
The new Porsche CEO definitely knows what he is doing, VW's core brand is also evolving well with the ID Polo, and even BMW has gotten something right with the Alpina acquisition and concept
Källenius on the other hand is responsible for the gigantic commercial flop that is the EQ series. He directed that before becoming CEO and then had to shut it down as CEO because people didn't see the cars as prestigious. And they are right. They look and feel like new Chinese brands. And don't even get me started on the new AMG GT. That is both a hideous and soulless car.
Exactly this, since the diesel scandal it is also legitimate to say that Mercedes and VW management is a criminal organisation. They have ruined both brands, taken insane money from German taxpayers and now they are leaving. It would have been nice if the government stopped supporting them earlier and rather helped ev startups flourish more.
> gigantic commercial flop that is the EQ series
I once had the chance to do sit in an EQS (450somethingorotherdontreallyknow?).
The car had a sticker price of 156k€ (!!!), yet everything just felt _so_ cheap, was squeaky plastic - nothing in that car did warrant the price.
Mercedes has definitively better quality again in its latest models. I know because I own one (and wouldn't have touched EQA/EQB/EQE/EQS either).
Porsche's financials are trash because of their cancelled EV projects. After 12 years of half-assing electrification, it looks like BMW is really hitting it out of the park with the new i3/ix5/ix5.
The new Porsche CEO took over in January, the Mission S has been in development since ~ March and that is the first interesting new Porsche model in ages
Nobody can have worse leadership than VW. Daimler is really in the top 2
Check the new cars, like the ID Polo, ID3 Neo and ID Cross. They've done a 180 on interior and fixed the exterior design language. It's one of the best interiors I've seen in a long time in entry level to midrange cars, and the way their CEO talked about it was refreshing.
This is the general mindset in Germany, atleast amongst people who follow new car releases. The ID Polo in particular will be a smash hit, I'm sure.
They say the difference between an optimist and a pessimist is that a pessimist says "It can't possibly get worse than this!", and an optimist says "sure it can!"
As someone living in Germany, I can totally see why. Electricity price is through the roof since the country phased out nuclear. It's one of the highest in the world in fact.
Also, the culture here is extremely risk averse. Add the layers of bureaucracy and the inability to move with time, I expect more and more large companies will succumb to a similar fate.
Germany absolutely needs reforms in multiple areas (bureaucracy and social welfare are probably the most pressing), unfortunately it's the same story in most of western Europe.
It feels that the political left doesn't want to see this, it seems that they're unable to see the forest through the trees. Lots of focus on specific topics, barely any holistic visions for the future of the country or the continent.
The political right is quick to blame the immigrants and while it's absolutely reasonable to have concerns about e.g the number immigrants receiving social welfare it's effectively a minor issue compared to the lack of economic growth or the absence of innovation.
There are many reasons for our high electricity costs but it's not the lack of nuclear power.
The price is mainly driven by the most expensive power source required to fulfil demand. Nuclear was not the most expensive source, even though it's more expensive than renewables. Usually, gas peakers are the issue, and we could save a lot of money by replacing them with battery storage.
The last nuclear power plant was shut down in April 2023 and the next month, electricity became cheaper. In April 2024, it was much cheaper.
https://www.energy-charts.info/charts/price_average/chart.ht...
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We have a problem with both electricity and gas at the moment. This is very bad news for chemical industry, which is already collapsing. The chemical cluster in Sachsen-Anhalt, Mitteldeutsches Chemiedreieck is dying rapidly, layoffs are regular in that area and this is now a voter pump for AfD. The weakness of the whole sectors of economy is now going to cascade downstream, unless the war stops and gas starts coming back, because there is no way Germany can restructure economy in a very short period of time with the current or any future government.
I think gas is about six times as expensive for industrial use in Germany as it is in Texas/Louisana. If you’re running a chemical plant where gas is a primary input it’s hard to see how you could be remotely competitive even with better technology/higher quality etc.
Is the industry not profitable with gas imported from sources other than Russia? Other countries (e.g. Japan) have large industries, including chemical industries, fueled by relatively expensive LNG from Arab States (or USA), what's different about Germany?
The natural gas price at the EEX/THE exchange is currently about 3x of what it was before the Iran war
Edit - the "cheap russian gas" story appears to be a myth:
https://adamtooze.substack.com/p/chartbook-150-why-cheap-rus...
https://www.forbes.com/sites/michaellynch/2022/06/30/germany...
The article isn’t about energy costs. It’s about union negotiations and competition with cheaper Chinese automakers.
Yeah, I'd say that's a huge oversight by the authors of this article.
What part of a car's "bill of materials" do you think is electricity?
Sounds exactly like Japan
Or Italy.
Unsurprisingly, export manufacturing based economies are all facing the same decline.
As they lost their special know hows, the advantages are now in the hands of who invests more, diversifies more, has less bureaucracy and is more risk prone.
This view drives me nuts.
Labor cost in the east is a fraction of Germany. A Chinese factory worker is gonna work 50h/week for under 20k/year, instead of 35h/w for more than twice that.
But of course it has to be the fact that they pay like 30 bucks less per MWh in China that makes it impossible to compete. German nuclear exit is most certainly the main factor here /s.
"It is difficult to get a man to understand something, when his salary depends upon his not understanding it"
I'd say both are true. Electricity prices are killing supply of components and materials from upstream, supply chain gets longer and significantly more expensive, if you ship from India or China instead of Halle. And thanks to war in Iran, shipments on that distance are now incredibly expensive (5x more expensive than before, as I heard).
Or, both are true, and both reduce Germany’s competitiveness, depending on the sector.
http://archive.today/fcp4U
Germany used to export cars and import profits. Not it is exporting its factory capital and importing Chinese EVs / batteries. This would hollows out the domestic parts suppliers in a long-run.
Alternative non-paywall
https://www.dw.com/en/mercedes-benz-germany-investment/a-799...
Their whole strategy is selling luxury cars in China, without an afterthought on what might happen if that market changes in any way. Now, they don't know what to do. At the same time, they destroyed their image. Instead of being the most reliable car, they transformed themselves in a luxury brand.
Before I read your comment, I had no idea they were once considered reliable cars (until the 90s?). I remember people mocking their reliability issues and owners groaning about repair costs for the last 25 years.
For a long time the Mercedes E class was the taxis car. Reliable as hell. There was also a saying akin to "the last car will be a mercedes", meaning the last car you buy in life will be a mercedes because it will outlast you. That changed heavily in the late 90s and 00s.
Cost of sales 1310. Cost of labour 747. Cost of administrative expenses 770.
Labour cost percentage 35.9% Indeed quite high.
https://group.mercedes-benz.com/documents/investors/reports/...
Very mismanaged brand.
The CEO has been a disaster imho.
Took a brand that was "aspirational professional" and tried to make it ten years younger and sportier.
So it took itself from an empty niche, to the very same one occupied by Audi and BMW.
Wrong demographic with the wrong budget.
Reliability has gone downhill, while interiors look like a tacky vietnamese solarium appealing to gamers.
If you want to understand how clueless management is about cars just look at the SL model.
200k for a car that every person with that budget will skip to get a Porsche 911.
I see 911s everywhere, but SLs? They used to make sense at a different budget decades ago, now they are nonsense.
This is news to me. Can anyone provide context? Have MB sales gone down?
Oh, I had forgotten I had an active FT subscription with everything else going on in the world.
> Mercedes-Benz has decided to halt “all further investments” in Germany and warned that plant closures were now an option, marking an escalation of its stand-off with unions in a bid to reduce labour costs.
> The German premium carmaker has called for longer working hours without extra pay to boost productivity but has failed to reach a deal with its works council despite four months of negotiations.
> In an interview with board members published on the company’s intranet on Thursday, its production head Michael Schiebe said “the current cost structures do not allow us to invest in Germany”.
The article is short and sweet, so I’m wary of copying all of it. It goes on to explain:
* A 35-hour work week is the norm in Germany for automakers, and MB is asking their workforce to change to 40.
* Rising competition for cheaper Chinese automakers is placing new economic pressures on MB.
The quotes make it sound like this could also just be a negotiation tactic.
I root for the workers.
I hate that we live in a timeline where we keep asking more and more out of people.
We have one life to live.
Stop exploiting people.
Do you root for tariffs or do you support international status quo?
If one country can have slaves, and you trade with them, then your country must also have slaves. Otherwise they price out your workers.
We already fought the war that this caused in America (Civil War). China is going to be in a war against slavery soon too.
There cannot be fair trade while one side uses slaves. It's pretty simple.
So if you root for workers, don't also root for China. Their standards for work aren't what you want your workers to compete with.
No you don't. Slave based economies get out competed.
> I hate that we live in a timeline where we keep asking more and more out of people.
This is not the case. We have more leisure time and social safety nets than ever before.
This is definitely not true. Whether you are looking at medieval societies, hunter gatherer societies, or established modern societies, there are clear examples where people had more leisure time.
In the simplest possible case, back in the 1950s, most households had one paid worker. Today, most households have two paid workers. The per worker number of hours remained flat, but the per adult number of hours worked skyrocketed.
Pre agricultural societies typically worked less.
Medieval peasants worked long days, but it was highly seasonal, and was limited by light. They worked ~1500 hours a year, and put another 5-800 hours into domestic work. Modern Americans will be very familiar with about 1800 hours of labor a year, plus 5-600 hours domestic labor. Plus significantly more errands and transit stacking on a few hundred hours a year. Most Americans push close to 2600 hours a year. But it can go much higher if you factor in childcare (largely kids in medieval times were put to work).
So, your claim of more leisure time is definitely incorrect.
We definitely have better leisure time. And our social safety nets are better (though declining as of late). Quality of life is higher for sure. I'm solely objecting to the claim we have more leisure time.
> In the simplest possible case, back in the 1950s, most households had one paid worker.
In 1950s, most households were in subsistence agriculture, where both spouses worked more or less around the clock. On in a couple wealthiest countries of the world, where minority of population lived, the situation was different.
It could also be said that during the 1950's, in a couple of the wealthiest countries in the world, one spouse worked more or less around the clock and the other worked for about 8 hours...
I agree with you. Household labor IS labor. However in the world where both spouses moved to working for a wage, those 8 hours of housework do not disappear. They still need to get done, they just come from both spouses leisure time now.
They seem to be asking their workers to work 40 hours a week.
That’s where it begins. They’re competing with Chinese manufacturing, 5 more hours a week isn’t going to solve that problem.
Would a modern-day Henry Ford have kept the standard at 40 hours, or might he have lowered it further due to his progressive nature?
He'd have tried to cut dead weight bodies off the payroll rather than give a crap whether any particular body is on the clock 30hr or 60hr.
Trying to get your manufacturing employees to show up more so you can make more money on the fixed costs (benefits, training, etc) is to put a baindaid on a bullet hole that is the modern big enterprise as it exists in the modern economy.
Progressive nature? He was famously a fascist.
He was famously antisemitic. His policy of paying a good wage was considered progressive.
Ah, thank you for the clarification and added context.
He was given the highest civilian award available from Nazi Germany--more than just antisemitic (which you are right on), but I understand you didn't mean politically. Thanks for the clarification
The shareholder distribution is listed here: https://group.mercedes-benz.com/investors/share/shareholder-...
Only 6.4% of institutional and strategic investors are based in Germany. 34.5% are retail investors, and 20% of the German population owns any shares (of any company) at all. So most investors of Mercedes don't have any particular reason to invest in Germany.
FTA: it looks like their sales figures in China have slumped quite a bit. As a car guy, apocryphally, it seems the major German brands have spent a lot of time and resources realigning their offerings to that market (at the expense of their other markets), and now that Chinese manufacturers are putting out some genuinely great cars for much cheaper, are reaping the costs of that decision.
What kind of “alignment” are you talking about? Cars with zodiac signs?
I'm guessing cultural adaptations like supposedly Mercedes had to do when reaching the north American market and had to add a cup holder because everyone has the habit of taking a coffee in the morning while driving to work.
They had created tooling for cars with longer wheelbases because apparently having a larger back seat area is sought after in China. The design language also apparently was intended to appeal to Chinese buyers (I'm less sure on this, but notably the design language of both BMW and MB changed pretty dramatically in the last 10 years).
Presumably the obnoxious radiator grills, tasteless light arrays and overly massive bodies.
German car manufactures are under pressure for some time now (Chinese competition, Trump's tariffs, bad decisions).
They want to reduce cost and the obvious way to do that, is to reduce the work force. That's not an easy thing to do in Germany, because unions and the worker's council are quite powerful.
That production is too expensive in Germany (and therefore halting investments), may be true or not, but stating it officially like in this announcement is mainly a method for forcing concessions from the worker's council.
Have you been living under a rock? The US warned Merkel, many years ago, to not be entirely dependent on Russia for energy.
Then Germany took the dumbfucktarded decision ever: they shut down all their nuclear power plants and they decided to become ultra-reliant on Russia.
In addition to that, the EU took another deeply fucktarded decision: they fucked up the timeline to "move to EV", by giving only 14 years (which is basically development cycles for only two generations of cars in Germany) to German manufacturers to move to 100% EV.
When european car manufacturers were nowhere when it came to EV cars.
So german (and french: and the number in France are terribly bad too) car manufacturers were forced not only to move to EV in a crazy hurry while their know-how was in ICE, but in addition to that due to closing nuclear plants and Russia beginning a war, energy prices rose like mad.
At some point energy price for car manufacturers was 7x higher than in China.
How do you want german car manufacturer to compete when both their own politicians and the EU as a whole teamed to destroy them?
That's what happened: instead of giving a reasonable timeline to move to EV (14 years was way too short and, btw, the EU did move the timeline a bit further now: but they realize too late they were wrong and did too little), the EU made sure energy price rose like mad.
The EU killed the french and german car industry. That's what happened.
Recently the CEO of Airbus explained in front of politicians that if France and the EU kept doing what it was doing, Airbus would suffer the same fate as the french car industry.
When ultra dumb decisions like this are taken, the consequences take some time to show up. First you need a full cycle of development for a new car, then you've got a company like, say, Porsche producing the shittiest Porsche ever, the Taycan, in a seven years development cycle. Then everybody realizes it's a piece of shit and customers want, from Porsche, a 911.
Then you've got even more dumbfucktarded decision: like the Porsche Macan ICE being the absolute best selling Porsche model. And Porsche decide to stop selling ICE Macan and start selling only 100% EV Macan. With batteries shittier than on Tesla or chinese cars.
And so Porsche's benefits, YOY, dropped... 93%.
Ninety-three percent revenu drop.
It's the same for all german car manufacturers: VW is in deep shit, Mercedes is in deep shit, Porsche is in deep deep shit.
And we have to thank the EU bureaucrats for that.
I'm not saying german car manufacturers had to keep selling ICE forever: I'm saying the EU should have made sure they had competitive energy prices for their factories and they should have been given more time for their switch to EV.
P.S: as a sidenote in France while workers at french car manufacturing companies were all concerned about their safety nets and social security and social rights etc., they didn't think that all that wouldn't matter as they'd find themselves completely out of their jobs instead due to the dumb decisions of EU bureaucrats (who seem to be in a hurry to destroy the EU as quickly as they can).
> (14 years was way too short and, btw, the EU did move the timeline a bit further now: but they realize too late they were wrong and did too little)
5 years of those 14 have now passed, and while it's true 5y ago they were nowhere to be found on the radar, they are still churning out cars like it's 1980 after 30% of the usable timeline is gone. The boards have no vision how to perform the switch to electric or how to play in an ultra-competitive market where it takes now 2 years from design to selling instead of the usual 10. Otherwise something would have been done by now, like securing some battery supply chain agreements, building fabs or ensuring to give people what they wanted (~500km range for a C segment car). Instead the ID.Polo starts at 23k with 330km range, and we'll still see about reliability, performance and software. Heck, Tesla Berlin took 3 years from breaking ground to mass production, and they still can't make something competitive with the Model 3.
I imagine nothing would have happened for another 10y if the timeline were longer. I believe the intent of the EU was to set a clear direction to follow and to push the industry to go for it, instead the dinosaurs keep finding excuses to protect the status quo and play by the old rules.
I agree with the points about cheap, clean and renewable energy that should have supported this.
>Then Germany took the dumbfucktarded decision ever: they shut down all their nuclear power plants and they decided to become ultra-reliant on Russia.
Shutting down the nuclear plants before coal was stupid, but did not make Germany ultra-reliant on Russia. There were plenty of other sources of fossil fuels (Netherlands, Norway Middle East). Unlike gas/oil, Germany is still importing uranium directly from Russia btw.
>When european car manufacturers were nowhere when it came to EV cars.
The decision to phase out ICE in the EU was made in 2022, deliveries of the VW ID.3 started in 2020, and that wasn't the first European EV by a long shot. Sure the vast majority of Europe's car manufacturing was still geared for ICEs, but that statement is wildly inaccurate.
Earlier: https://news.ycombinator.com/item?id=50473760
With the rise of China as the place that can manufacture just about anything it is going to be very hard for labor to have power anywhere else in the world because they can just threaten to move their manufacturing to China.
Except, of course, that China is no longer the cheapest manufacturing source around.
https://chinamakershub.com/journal/china-manufacturing-costs...
Due to unions in Germany labor costs are "too high." Mercedes-Benz, known for it's affordability, is worried about it's customer base balking at the cost of it's products. Or they're just anti-labor, greedy, turds.
The EU is pushing EVs extremely hard, extremely quickly.
At the same time, China is much better at EVs, and they're sold freely in Europe for less than the Euro carmakers can build them for.
It's a perfect storm. The carmakers are caught in the middle. They have to quickly and radically transform their product portfolio away from what they know, to something they don't know, AND they have to find a way to charge way less for it.
Why put the "too high" in quotation marks?
If you compete on global markets, you inevitably compete with global wage levels, and somewhat comparable talent in China demands not even 50% of the wage it would get in Germany.
There is a reason that new car production has been shifting towards lower wage countries for decades now (US=>Mexico, Europe Central=>East).
This situation is gonna get better for countries like Germany once Chinese wage levels have somewhat caught up, but that might still take a while, and other big currently industrializing lower-wage countries might take over that role (like Indonesia or India).
Obviously the smartest course of action here would be to fine MB and levy a new tax on them to ensure future state revenue.
Can be financed by a new subscription on Mercedes drivers that enables turning the steering wheel
If they fined MB drivers every time they failed to stop at a pedestrian crossing they would soon solve any budget problems.
If you f*ck up your strategy for long enough, you can tank an entire company.
Thank you MB for reminding this to the world.
Jeez, 35 hours a week and the unions won’t budge. Workers in China and Vietnam work 35 hours A DAY.
Sounds like the workers in those countries need to organize for sane working conditions.
> Workers in China and Vietnam work 35 hours A DAY
You kid but when you add up the amount of time a western BigCo worker spends in BS mandatory meetings and trainings and other BS that they don't care about, isn't productive and comes down from above in some misguided attempt to polish the statistics I bet the guy in China is actually spending a lot more time on task.
The problem is unfortunately much worse overall.
China is killing Germany's car production and has been for a while. It is now just much more obvious, even quality-wise, which used to be a stronghold foundation of german engineering. Expanding eastwards and cutting costs is a losing strategy for Germany - there is a reason why the AfD is gaining momentum, despite their addiction to ultra-right thoughts. Meanwhile, incompetent people such as Merz (old guy, talks big, acts little) fail hard when they meet reality. Guy is now sinking Germany quickly and he has no decency to want to step back and let more competent people at the least try to fix Germany. Meanwhile France is going closer towards bankruptcy. To some extent this is similar to the 1930s era, also aided by Trump cronies and the Putin mafia.
Germany but also the whole EU, needs to completely reconsider what it really wants; and how it plans to achieve that. The china dictatorship makes much more logical decisions - not in all areas, of course, but they pursue a strategy. Systematically. The EU does not really do that. They just claim they do but in reality they do not. Green energy is fine and dandy but if the prices keep on rising, inflation rises as well, then something does not work with that promise.
Not like 1930s. They arent bankrupting themselves paying WW 1 reparations and bread is not jumping by a million marks every week. This is more like Japan post the good times. Some corps and people will take the hit because they cant compete. Firms that survive will be the ones that find new ways of doing things. People waiting for politicians/political parties to save them are misguided and blind to how many global factors no one has any control over.
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TLDR; they didn’t invent anything new in the past 30 years and now Chinese and others caught up on them. It’s hard to maintain the luxury price if your product doesn’t offer anything different and the performance is mediocre.
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Article is pay walled but if the headline is true that's tragic. I wonder if they're going to invest elsewhere or just admit defeat and slowly wind down the business.
I can't help but think this was influenced somewhat by the shutdown of Germany's nuclear reactors thus making energy more expensive and all the knock on effects.
Mercedes-Benz turned a net profit of $5.3 billion last year. Even if they had had a bad year, they would have assets - tangible and intangible - and potential for turning things around. There's plenty of stakeholders with, well, stakes in the business and incentives to see it do well.
How does one come to wonder if they are going to "slowly wind down the business"?
"We're stopping investing in the business" is usually synonymous with "growth ran out and we have no idea what to do besides hope and pray and eventually go bankrupt"
basically, management is in a standoff with the unions about working more than 35 hours without paying for it, they also don't want to pay holiday bonuses.
Citing high production costs, they are looking to the US and want to bring costs in Germany down to the production costs in the US.
Nothing about what cuts the management is willing to take.
> Citing high production costs, they are looking to the US and want to bring costs in Germany down to the production costs in the US.
Which is funny since both are much higher than China. These lagging car industries will only be able to be protected for so long from Chinese EVs like BYD.
> I can't help but think this was influenced somewhat by the shutdown of Germany's nuclear reactors thus making energy more expensive and all the knock on effects.
The shutdown had no effect on energy prices in Germany.
What did then? Genuinely curious.
https://fred.stlouisfed.org/series/ENRGY0DEM086NEST
Yeah, the paywall is questionable - I don't think I'd read them enough to be worth paying the price even though I understand they need to make money...
My bet (edit: reading other comments I'm glad I didn't put money on it... leaving this comment anyway) based on other cases of this is they are fighting a law (or several laws), and are making this threat as a "change the law to favor us or we will leave and this prove you need us more than we need you".
I don't know how it will work out for them, I've seen it go both ways. I've also seen this stop some really stupid laws, and also stop some really good laws. Without knowing details of what they are trying to do I can't comment on which side I support.
MB is complaining that they can't force the union workers to work longer days without extra pay. They are also complaining that Chinese automakers are selling well in Europe and are much cheaper to build. The second complaint is completely valid, I don't see how domestic auto making can survive when you can pick up a BYD for much less.
I think that energy prices are just a part of the root cause.
The other parts are:
1. German producers really fucked up with the "electric" revolution and were caught a bit with their pants down by Tesla and especially the Chinese brands.
2. Specific to Mercedes-Benz, I believe the brand failed to attract younger buyers. Personally, I associate Mercedes cars with boomers/older genX folks.
3. Price. In a moment in which affordability is a major issue for the majority of people, the base model of the cheapest car (the A class) starts from 42900 CHF.
It seems they are not going to give in to the demand from unions in Germany. To prove their point, they are announcing the consequences of having a workforce that is overpaid and no longer know what real work feels like. German workers need that wake up call if they don’t want to become a third world country.
A quick google shows they make about 45k/year (pre-tax). Even for Germany that is not a lot of money. That is less than the median Germany salary. Mercedes is asking them to work 40h/week without an increase in monthly pay. Who would accept that without a fight? Mercedes does not build cheap cars, I am sure they can afford reasonable pay. Have you worked in car manufacturing? Do you know what "real work" feels like?
That may well be true, but they don't have to compete with median german salaries, they have to compete with eastern European/Chinese ones (where a lot of car production already is).
And a factory worker in China makes <$20k/year, and will be easily convinced to work longer than 35h/week.
If salaries are really the problem, what they need is more automation, not workers willing to accept lower salaries.
Lower salaries are the easy solution to increase profits when the managers are incompetent.
It's not an issue of how much anyone feels they ought to be paid.
German automakers are simply shifting production to eastern Europe, where there are skilled autoworkers who will happily make cars for 4X less the cost of labor vs. German labor.
This is true. Firing lazy workers are super difficult here. So the wage doesn't move and people with a cushy job do whatever the hell they want without any consequences.
Labor costs for a car are in the single digits percentage wise, in Germany. It’s laughable to blame the workforce for mismanagement.
No, that analysis is wrong. You try to blame it on the workers.
While it is true that the work cost is higher than in Poland, even though Poland closed the gap immensely in the last 10 years, the issue is much more deeply rooted. There is no way Germany can now compete with China. This happened to the USA too, decades before, see how Detroit collapsed. China kind of copied the Japanese and South Korean variant while massively upsizing all of that, including integrating key aspects into their work flows. You only need to look at robot factories. You won't find that in Germany much at all. The innovation changed completely.
Mercedes-Benz just tries to shift the blame to lower costs, which is understandable from their point of view, but does not fix the core problem. Even building in Poland or Romania, won't fix the issue with regards to China. That's not the fault of the workers primarily.
I'm relatively certain Detroit collapsed because their vehicles were junk. The entire reason why 70s era vehicles are so easy to keep running today, is it took just as much work back then to keep them going.
By stopping import of Russian gas, yes, there is no way to compete with China.
Imported natural gas used to cost Germany roughly €12 per megawatt-hour (MWh) at the border
Now wholesale prices have climbed to around €60+ per MWh, roughly FIVE times higher than previous levels.
That's goodbye to Industry in Germany - well except for the War Industry which has state protection and funding and doesn't need to be competitive. And China has become even more cheaper since they pay far less for Russian gas.
I don't know why the very bright guys here on HN have such HARD blinkers on correlation and causation between energy prices and energy-intensive industry. Even Merz himself finally admitted it this year but most HN posters want to put their high-IQ heads into cement rather than admit that stopping Russian gas was one the main causes of the downfall of German industry.
And why can’t they compete with China? Part of that is “work cost”.
If we traverse this blame game to the top level we wind up at capitalism.
Cost of labor is almost a rounding error in car making. Energy and equipment are much important.
Cars are mostly built by machines.
Workers shouldnt have to live poorly so you can buy a cheap German car. The reality as the GDP goes up and wealth and wages go up, you can no longer compete in manufacturing compared to poorer countries. This is how capitalism works. Blaming the workers is entirely wrong. Everyone who works should have a good wage. Germany is just experiencing what the US experienced 20-30 years ago when it admitted its best moving a lot of manufacturing overseas. Near everything you own is made in these poorer countries, but that's not a problem, but somehow when it comes to cars, people take offense.
Until we achieve worldwide socialism where it doesnt matter what is made where, this is how its going to be. National borders will dictate economics and what is best done in those countries. The wealthy west simply cannot compete on manufacturing anymore.
> Workers shouldnt have to live poorly so you can buy a cheap German car.
Have you looked at the prices of German cars? Nobody ever called them cheap. Germany exports mostly luxury vehicles, while paying their workers a pittance. As China car manufacturers move up the quality scale, they will eat up whatever marketshare German cars have.
yes for sure it's the fault of the lazy overpaid workers not the decisions made by management. and this germany has to wake up narrative is the same that comes from the right wing politicians. so i would call this bs.