Germany as a business location is under threat. Irresponsible energy policy of the federal government as well as increased pressure of emigration and outsourcing in the German automotive industry. It was earlier considered an important industrial backbone of the country. But the outlook for energy prices remains gloomy.
Germany’s automotive industry is groaning with high energy costs, which are mainly a result of the failed energy transition and energy sanctions against Russia by the German federal government. Not only is the ideological battle against combustion engines stifling the business environment (where manufacturers still make money unlike electric vehicles), the exorbitantly high electricity costs also create a competitive disadvantage in the production of battery cells.
For example, an increase of just one cent per kilowatt hour (kWh) in the price of electricity results in an additional cost of 100 million euros in battery production, according to the NZZ report. If you consider that the Federal Republic is one of the most expensive countries in the world in terms of electricity prices, it also becomes clear that we are talking about additional costs of billions of euros. Costs you want to avoid by choosing the proper location. For example, Porsche will likely build its battery cell factory in North America, where there are competitive electricity prices and skilled workers. Germany doesn’t play any role as a potential location for the sports carmaker. In this regard, the situation is not much different for other major players of the German automotive industry.
Even in the German mainstream, people are now warning of the danger of de-industrialisation due to the sharp rise in electricity prices. Many companies are now also facing a four-fold increase in electricity prices. In such a situation, new investment in Germany cannot even be imagined. Especially because the German Ministry of Economics has also exposed Robert Habeck’s promise of cheap green electricity as propaganda. Because current forecasts do not suggest that electricity prices will fall again in the next 20 years. Rather, indicators point to rising electricity prices.
However, in doing so, the federal government is not ensuring a business-friendly environment, but de-industrialization and significantly weakening the German economy. A country with relatively high labor costs in particular has to strike a competitive balance at other levels if it – like Germany – wants to operate primarily on global markets.
