When one thinks of German cars, luxury brands immediately come to mind. Car brands such as BMW and Mercedes-Benz are synonymous with the luxury car world, and they have represented Germany with great distinction in the past few decades.
But German automakers know that electric and autonomous vehicles are the future of the industry. They do not want to be left behind China and other countries who are already making inroads with such technology.
BMW and Volkswagen are the two companies that recently completed deals to develop electric and self-driving vehicles in China. The two companies signed the deals around the time Chinese Prime Minister Li Keqiang visited the country.
While there may be some connection between the two stories, it is more a case of German automakers knowing where the future lies.
Brands such as Volkswagen, BMW and Mercedes have a place in the car industry – a major place. But they know that China is pushing ahead with technology for electric and self-driving vehicles.
The danger of being left behind is very real, even for brands with the recognition and financial might as these German car makers.
Chinese Car Manufacturing
China already produces around 25 million passenger cars every year in its factories. It is a top market for brands from around the world, while electric cars are very popular there.
The deals from BMW and Volkswagen highlight China’s importance in the coming car revolution. Volkswagen has committed more than 15 billion euros to their Chinese venture, which will involve the research of e-mobility and autonomous driving.
BMW is focusing on electric cars with its partnership. They are interested in producing electric Minis in China. They are partnering with Great Wall Motor on this project. They are also formalizing a deal to join the board of Apollo, an autonomous driving project underway in China.
Daimler, the parent company of Mercedes-Benz, also extended their existing deal with a university in China to continue research into automated cars.
Chinese Push for Electric
Part of the reason why there is so much commotion around electric cars in China is the government’s desire to reduce pollution. Cars are a source of greenhouse gases around the world, especially in developing and developed countries with huge populations. China fits into that category.
In fact, the government has taken the step of enacting rules that will force carmakers to devote a significant percentage of their production to electric or hybrid cars. These rules go into effect from next year. It is the cost of doing business in China, whether the company is local or international.
Winds of Change
Whether autonomous vehicles are a reality in five or ten years is anyone’s guess. The technology is there and it is getting better. But the societal pushback to fully autonomous vehicles may be greater than many people expect.
Electric and hybrid vehicles are another matter. Their popularity is rising significantly. There is a huge market for these vehicles around the world and given China is taking the lead in this venture, it makes sense for German car makers to want in!