Telegraph article: Russian gas puts brakes on German E'

TaycanHero

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Has anyone got a subscription for the Telegraph?

I think this article may be of interest to many on here.

https://www.telegraph.co.uk/busines...-russian-gas-will-forced-put-breaks-electric/

Screenshot_20220719-154300_Chrome.jpg
Not needed. Thanks to the flaws with (slow loading) Javascript, simply refresh the page and then in half a second or quicker, press ctrl + a > ctrl + c.

Paste into Word.

Free article. Works with many paywall sites assuming they have a lax dev team...

To the article subject itself, this was something I and presumably others on these forums wrote about some months ago. Unsurprising and we will see how badly this affects DE herstellung.
 

TaycanHero

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Full article below using the above trick. Thanks Javascript!


Germany makes about a quarter of Europe’s cars CREDIT: FABIAN BIMMER /REUTERS

Germany’s addiction to Russian gas imports is threatening its car electrification ambitions as the prospect of Russian President Vladimir Putin cutting supplies becomes more realistic. That could halt German production lines, with the ripple impact of wider economic harm.

A 10-day planned maintenance of the Nord Stream 1 pipeline, which can send more than 10pc of the EU’s typical annual demand, is due to end on July 21. But German officials admit they are preparing for a “difficult situation” of gas shortages amid uncertainty over if or when supplies will return.

About a quarter of Germany’s energy needs come from natural gas and about a third of its gas comes from Russia. A permanent cut off from Russia could tip Berlin’s precarious economy into recession, shrinking the economy by 2pc to 10pc, predicts Carsten Brzesky, chief economist at ING Germany.

“The German economy is already at the brink of recession,” he says. “It won’t need a lot more to really push it into a severe recession.”

One crucial contribution to Berlin’s economy is the country’s automotive industry: it contributes 5pc of economic output and more than 800,000 jobs, totalling about 12pc of the manufacturing workforce.

Reports suggest an end to Russian gas deliveries could cause car output to drop by 17pc, in a worst case scenario.

That threatens Germany’s plans to continue as a leader in the automotive industry as it evolves, with the country among the most bullish on rolling out electrification.

Germany makes about a quarter of Europe’s cars. Its domestic brands make more than 15pc of the world’s motors, including output from factories overseas. Only China, the US and Japan produce more.

When it comes to electric vehicles (EVs), Germany rolled out 328,000 models last year, up 23pc compared to 2020, worth €13.7bn (£11.6bn). China - the world’s largest EV maker - made 2.9m.

German Chancellor Olaf Scholz has an ambitious goal of delivering 15m EVs by 2030, while Volkswagen — its largest carmaker — is planning to establish six gigafactories in Europe.

Gas is integral to those aims, used for processes including drying paint and moulding plastics for parts. Any hold-up to the process means vehicles not being completed or sold.

Germany has a rationing plan for gas-related emergencies: homes and hospitals will continue to receive the fuel, while industry will be in second place, particularly those that can halt production without damage.

According to Philippe Houchois, an analyst at Jefferies, car plants are a likely target as cutting production shifts is less risky and cheaper than shutting off a steel furnace, for instance.

“What's clear is autos are not a priority industry in terms of safety,” Houchois says. “Therefore, they can be shut down. Whereas other industries cannot.”

As international competition from the likes of China ramps up, Germany’s car industry has promised large investments to hasten electrification.

Volkswagen plans to spend €52bn on electrifying its fleet, Mercedes has earmarked €40bn and BMW €30bn. Most will come from profits the three firms make.

Last year all three companies were able to rake in a significant warchest, to put towards making EVs, as their largely middle class customer base snapped up higher-end cars with lockdown savings.

BMW made €16bn earnings before tax, up from €5.2bn a year earlier, Mercedes posted €15.8bn, up from €6bn and VW reported €20bn, up from €11.7bn.

Now, however, disposable incomes are rapidly drying up as the cost of everything from fuel to food and mortgage rates rise — threatening to cut those profits.

Mercedes says it has bought its gas supply via long-term contracts and that it would aim to cut gas usage at its paint shop and try to use more oil. It warned, however, that its 2030 target for going all-electric was subject to “market conditions”. BMW said it is also cutting back on usage and is “actively preparing” itself.

If the gas shortage is mild, the effects should be mild, said Houchois. If demand dries up, access to gas might not be enough; and if both demand and production drop, “that is the worst case scenario”.

"I think the industry is going to start to get worried a bit more about the feasibility of this transition to electric vehicles,” he adds.

This is happening amid a backdrop of rising prices for cars. The risk is "a negative spiral because the traditional story from carmakers is combustion engine profits fund the transition to EVs. But if the combustion engine profits go away, how do you fund your position? Or do you basically massively downsize the industry?”, says Houchois.

“We go back to this question of what's the next level of the market as it stands, as well as the social impact of downsizing?"
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