Given the relevance of the German automotive sector in the EU, exploring its latest FDI trends in China may offer a better understanding of the Common Market’s inconsistencies. If the EU’s green transition may be regarded as threatening to the industry’s profitability and innovation capacity, the Chinese market still represents an opportunity for German carmakers. After the Made in China 2025 strategic plan helped transform the country into a key electrical vehicle (EV) market, Volkswagen (VW), BMW and Mercedes-Benz deepened their integration into the Chinese ecosystem. In particular, their increasing FDI into China is set to challenge home-grown companies and capitalise on Beijing’s EV technology. In doing so, the German carmakers are trying to remain globally competitive and complete their electric transformation. Besides assessing the political backdrop, the following analysis will assess the German automotive sector’s investment model in China and its (demand- and supply-side) rationales. The possibilities that could arise from competition and collaboration with Chinese companies clarify why the EU should engage China in a long-lasting dialogue and relationship on the subject. Europe maintains its strengths but a clear vision for its automotive industry – compatible with its green ambitions – is still largely missing.
Author: Alessandro Laurucci, EIAS Junior Researcher
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