German auto industry calls for green subsidies in Europe based on the US model

The German auto industry is calling for a green subsidy system in Europe based on the US model to ensure the future importance of the industry in the region.

Hildegard Müller, President of the German car lobby VDA, called on both Brussels and Berlin on Wednesday to ensure that environmental protection policies also ensure the competitiveness of European industry.

“The United States has recognized what they must do for theirs [country] — Germany and Europe must do the same,” she said, referring to the US Inflation Reduction Act, which provides $369 billion in subsidies for green technologies and has sparked controversy in Europe.

She described the IRA as a “wake-up call” for European regulators, as it is a “protectionist and discriminatory approach to regulation that is at odds with open trade”.

Mueller’s comments came the day after Belgium’s prime minister accused the US of an “aggressive” campaign to lure European companies across the Atlantic with its new $369 billion green subsidy law.

The president of the VDA, to which Volkswagen, BMW and Mercedes-Benz belong, said she feared that German medium-sized suppliers would leave the company. A recent survey conducted by the organization revealed that 22 percent wanted to invest abroad, while 53 percent of SME suppliers were postponing or even canceling investments.

“Only a successful transformation – for the climate, the people and the economy – will be copied worldwide,” said the former politician, adding that the pandemic, the war in Ukraine and the subsequent energy crisis have shown that “our previous economic model automatic guarantor of prosperity is no longer valid.

“Ignoring the warning signs of the increasing burden of rising energy prices. . . is more than negligent,” said Müller.

New estimates released by the VDA show that the global passenger car market will grow by 4 percent to 72 million units in 2023, which would still be well below the 80.9 million cars produced in the year before the pandemic.

The German market was expected to hit 2.7 million cars, a level still down a quarter from 2019. China, on the other hand, surpassed pre-coronavirus levels last year and is expected to reach 23 in 2023, reach 7 million.

China is becoming an Achilles’ heel for the German auto industry, which is heavily dependent on the country’s fast-growing middle class amid fears that Germany could become too dependent on an autocratic state again.

According to the VDA, every third car from a German manufacturer is sold in China. Car manufacturers such as VW, BMW and Mercedes produce and sell many more cars in China than in Germany.

https://www.ft.com/content/4024a766-3578-403b-93be-5f5efbfd93f5 German auto industry calls for green subsidies in Europe based on the US model

Adam Bradshaw

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