Is TikTok the world’s most dangerous app? There are certainly more dangerous smartphone apps than short videos, but TikTok’s high user base and political clout add relevance to any risk. The app has 1.6 billion active users, and it is the primary source of information for many young people.
Reason enough to ask a data security guru: Is it a good idea for Olaf Scholz to present himself with more or less humorous short films on the Chinese app? Many Germans still remember Peter Schaar as the Federal Commissioner for Data Protection. In an interview with Fabian Peltsch, he says: A chancellor in particular should be careful with Chinese apps. In his role as an SPD campaigner, however, he considers their use justifiable – after all, the aim is also to reach young voters. This is where political pragmatism capitulates to potential addiction.
All technological diversity in one engine: The state-owned company FAW is experimenting with a triple drive that can run on gasoline, hydrogen and electricity. Even if an actual market launch seems rather unlikely, it provides valuable experience, writes Christian Domke Seidel. The result could still be used as a ship engine, for example.
Two of our articles today also deal with the EU’s planned import tariffs on Chinese electric cars. After all, it could happen this week: As soon as the European elections are over, the Commission wants to take action.
German Chancellor Olaf Scholz uses TikTok to reach voters. On the other hand, the German government encourages its public servants not to use the app on work devices. Do you see this as a contradiction and a credibility problem?
There is no denying that this is a contradictory practice. The question is to what extent it still makes sense for politicians to use such platforms and why this is justified. When it comes to political party representatives, for example, I believe the interest in shaping opinion prevails. The parties have a constitutional mandate under our Basic Law to help form people’s views.
And they need TikTok for that?
A balance must always be struck here, and the results can certainly differ. If it allows reaching large groups that are otherwise hard or impossible to reach elsewhere, i.e., young people in particular, who are the majority users of this service, then I consider appearing on TikTok to be perfectly justifiable – despite general legal concerns about the service. Even private individuals who express their opinions there can certainly not be forbidden from doing so. However, when it comes to a public authority whose duties are directly bound by law and order, I have serious doubts about the justifiability of its use. Given the risks, it is necessary to take a critical look at whether and how you are active there. So it does make a difference whether the SPD politician Olaf Scholz or the Federal Chancellor is active on TikTok in his official capacity.
What specific risks do you see?
From a data protection perspective, privacy is at risk. People lose control over their data, and there is a risk that someone might be interested in accessing it. In extreme cases, this could be a foreign intelligence service or a party organization of an authoritarian state that evaluates the posts and blacklists authors of critical posts, as we know them from China.
And?
The more users a platform has, the more closely it needs to be scrutinized. This is why the EU’s Digital Service Act requires so-called ‘very large platforms,’ which include TikTok, to meet stricter requirements in terms of transparency and security assessment. This is not primarily about data protection but preventing algorithms from manipulating and exerting political influence. The third aspect is IT security. The German Federal Office for Information Security (BSI) has issued a security warning stating that devices on which apps such as TikTok are installed could be manipulated and confidential information could be accessed.
Does the Chinese origin of TikTok’s parent company present European data protection officers with unprecedented challenges?
The fact that a Chinese platform has achieved such global reach is a new phenomenon. Structurally, however, the problem is similar to most other services offered by countries with inadequate data privacy regulations. Think of the debate about Facebook and Google. The European data protection authorities have repeatedly imposed heavy fines on these companies. But there are also considerable differences. For example, it is significant that we are dealing with the USA as a constitutional state, which cannot be said of China. The USA and Europe have a data privacy agreement and certain common data privacy principles to which Google or Facebook have committed themselves. However, there is no such agreement with China.
Western providers have been blocked in China for years, partly to prevent foreign influence and security risks. Is something similar conceivable in the West?
This should, of course, be examined. Data protection authorities have the option of preventing the operation of certain services as a last resort. In TikTok’s case, the Irish data protection authority is responsible, not the German data protection authorities, because that is where the company’s European headquarters are located. It must scrutinize the practices and can also impose fines. Moreover, even stricter sanctions can be imposed for violations of the Digital Services Act than for data protection offenses.
In both TikTok’s and Huawei’s case, there has so far been a lack of clear evidence to justify banning them and other Chinese technology providers.
Today, the term “Chinese technology” is often used very broadly. I strongly recommend a more differentiated view. You have to look closely at what components are involved. It makes a difference whether Telekom or Vodafone installs an antenna shipped from China or whether a switching center is outfitted with Huawei technology. With the latter, there is a severe risk that sensitive data can be accessed. The risk is even higher if a Chinese manufacturer supplies an entire communications system. The question is always: What are the risks and consequences of using the technology and components in question? And only then comes the question of whether this can be proven at all. The companies and the supervisory authorities – the BSI and the Federal Network Agency, as well as the data protection commissioners – have to closely examine this on a case-by-case basis.
At the TikTok hearing in the United States, the company spokesman stated several times that his company was not obligated to report to the Communist Party. Is that credible?
I don’t find that very credible. As a Chinese company, TikTok’s parent company is bound by Chinese law. And there are very general reporting obligations to the authorities and Party bodies when it comes to China’s interests. The public authorities and the Communist Party themselves are not bound by Chinese data protection law and their surveillance activities are not monitored by courts or independent data protection organizations. If a company wants to be active in such a country, it cannot avoid this. Incidentally, TikTok has so far disclosed very little publicly in this regard.
What do you think is more dangerous regarding data protection and security, TikTok or the flood of Chinese EVs rolling toward Europe?
We must take both very seriously because these cars today fulfill all the key connectivity criteria. By now, we know how much data is being collected, and not just by Chinese cars. Lots of cameras and sensors are used to record not only how the vehicle is operating, but also its surroundings. Because of the corresponding risks, Teslas are no longer allowed to be parked in Berlin police car parks because the cameras could record who is there. Many now think this is less critical if the data flows to the United States. And it probably is. Nevertheless, it doesn’t matter if it’s American or Chinese, Facebook or Huawei, it’s unacceptable for data to be siphoned off everywhere indiscriminately.
Peter Schaar is Chairman of the European Academy for Freedom of Information and Data Protection (EAID). From 2003 to 2013, he was the Federal Commissioner for Data Protection and Freedom of Information (BfDI). He published numerous books on the subject, including “Ueberwachung total – Wie wir in Zukunft unsere Daten schuetzen” (Aufbau-Verlag 2014) and “Truegerische Sicherheit – Wie die Terrorangst uns in den Ausnahmezustand treibt” (Edition Koerber 2017).
At the Vienna Motor Symposium 2024, the Chinese manufacturer FAW surprised with a new engine concept. The new engine runs on both hydrogen and gasoline. It can also be combined as a hybrid with an electric motor. This would allow it to utilize three energy sources.
It is unclear how practical the concept really is – after all, drivers would need two different gas stations and a charging station. However, it shows how willing Chinese manufacturers are to exploit the technical potential for future forms of car engines. It promotes the development of other engine types: for ships, trucks, or stationary engines, for example, in mines or factories.
The background to this bold move: Chinese manufacturers face regulatory hurdles. By 2026, new cars must only consume 4.6 liters per hundred kilometers. And from 2030, the limit will be 3.7 liters. Even hybrid vehicles cannot meet this challenge. However, FAW believes that the combustion engine can be optimized to such an extent that this consumption target can be achieved despite the use of gasoline – in combination with the use of small quantities of hydrogen.
A quick look inside the engine shows what problem FAW is trying to solve. Motor technology involves high-efficiency technologies, designed to maximize the efficiency of combustion engines. One of these technologies is the so-called “active pre-chamber.” The pre-chamber takes up around 10 to 20 percent of the entire combustion chamber. It is normally used to pre-ignite part of the fuel-air mixture. This flame then ignites the mixture in the main combustion chamber.
This allows engines to start reliably, even at low temperatures, run quietly and emit less CO2. In theory. In practice, these advantages have only materialized to a limited extent. The design is complicated, which makes the engine expensive, and the liquid fuel increases emissions disproportionately during cold starts. This is why modern injection systems have largely replaced the pre-chamber in the passenger car sector. Until now. FAW believes that hydrogen can breathe new life into the pre-chamber.
The pre-chamber of the FAW engine requires around five percent of the total combustion energy. A car with a range of around 1,000 kilometers would then need a hydrogen tank with a capacity of around 0.6 kilograms – one-tenth of one in a conventional engine. FAW claims to have significantly improved efficiency and drastically reduced emissions.
The engine can either replace a classic combustion engine or be integrated into a hybrid system. However, this is where the system’s weak point becomes apparent. If a customer has a plug-in hybrid with such an engine, they would have to charge the battery and refuel gasoline and hydrogen. A process that is simply too expensive to have any market opportunities.
Despite problems with the impending tightening of emissions regulations, FAW also sees a long-term future for hybrid drivetrain. These cars play an important role in the New Energy Vehicle (NEV) sector. FAW believes optimizing efficiency will be enough to keep the concept competitive against conventional electric cars (with and without range extenders).
This is mainly due to how emissions are calculated. Like the supplier and automotive industry, FAW increasingly looks at emissions over the entire product life cycle. This means that companies also include production and the CO2 footprint of power generation in their calculations. Due to the high proportion of coal-fired electricity and energy-intensive battery production, pure battery vehicles currently perform worse than hybrid vehicles in this type of analysis in China. According to FAW, this will only change in 2045 with sufficient renewable energies in the electricity mix.
FAW is under pressure in the NEV segment. The state-owned company is growing significantly slower than the market in this segment. Caixin Global reports that the government expects the brand to make noticeable improvements in this segment. While the share of NEVs in the overall market was 32 percent, these cars only accounted for seven percent at FAW. Caixin believes that one reason is that state-owned companies are too timid in their approach; Dongfeng and Changan are also underrepresented in the NEV segment. Private companies are more willing to take risks. This is an accusation that does not apply to FAW with this engine.
Anyone calling for import tariffs on Chinese EVs and batteries these days is not making friends in Germany – neither in politics nor the automotive industry. Nevertheless, there are four reasons that speak for them in order to keep jobs and value added in Germany and Europe in the long term.
Firstly: We need fair competition. While the EU imposes tariffs of ten percent on Chinese EVs, China imposes tariffs of 15 percent on European cars. The imbalance is even more drastic for batteries. While only 1.3 percent is levied in the EU, China imposes almost eight times as high tariffs of ten percent on batteries manufactured in the EU. Because China has also strategically subsidized the domestic EV industry for years, Europe must impose higher tariffs to create a level playing field.
Secondly: Unlike in the USA, it is not a matter of categorically excluding Chinese manufacturers from the European market. On the contrary. The tariffs must be tiered in a way that creates strong incentives for investment in the European market. This applies, in particular, to battery production. Tariffs should be tiered to stimulate their production in Europe while preventing a trade conflict. For example, lower tariffs could apply up to a specific import volume (e.g., 10 to 15 percent of the market), after which the higher tariff would come into force. To create an incentive for local battery cell production, Europe would have to raise tariffs to at least 20 to 25 percent by 2027 in order to close the average cost gap with China.
Thirdly: Although “Made in Germany” still stands for the highest quality when it comes to electric cars, this is not the case for batteries. Even if the success-spoiled German car industry doesn’t like to hear it, what we need today is to reverse the Chinese model from the 1980s. Back then, the Chinese government only allowed manufacturers like Volkswagen to enter the market on the condition of joint ventures with domestic companies. Only those who shared their knowledge were allowed to hope for sales in China. Today, Europe’s manufacturers must learn from their Chinese competitors, particularly in battery cell production. Not only are they more innovative, but they also know how to mass produce new battery technologies quickly. In addition to tariffs, measures for technology transfer and investment in production and training are needed to ensure that value creation and well-paid jobs stay in Europe.
Fourthly: The ghost of a trade war and fear for car manufacturers’ profits hang over all this in the German perception. But even if the companies continue to earn a considerable part of their profits in China, the long-held claim that sales in China pay the salaries of engineers in Wolfsburg is becoming less and less true every year. VW is investing a billion in a research center in Hefei (China). BMW is taking advantage of the more favorable production conditions in China to manufacture the iX3 there and export it to Europe. The large supplier ZF plans to cut 12,000 jobs in Germany while pursuing an aggressive growth strategy in China. In other words: We cannot equate the interests of corporations with the interests of Germany and Europe. A strong, locally producing European EV industry is essential for climate action and jobs.
Meanwhile, Chinese announcements of retaliatory tariffs make this threat seem more real than it is. We should not forget that China is just as dependent on the European market as German manufacturers are on the Chinese market. Nevertheless, there is one important difference: Biden’s decision to multiply US import tariffs on EVs from China to 100 percent strengthens Europe’s hand. Chinese manufacturers have built up enormous overcapacities, which they can now only sell in large quantities to Europe.
This makes them dependent on market access. At the same time, all German manufacturers have been operating large plants in China for decades. For instance, Volkswagen manufactures 99 percent of its sales for China in China. Audi (91 percent), BMW (87 percent) and Mercedes (80 percent) also produce almost all vehicles sold in China locally. These plants and their profits are, therefore, not affected by potential retaliatory tariffs. However, the situation is different for Chinese manufacturers, who are only beginning to gain a foothold in Europe and do not yet operate a single finished plant in the EU.
Politicians in Germany and the EU must now act with strategic foresight. In the short term, import tariffs are a necessary evil to ensure that local manufacturers can catch up technologically and that Europe as an automotive location can survive in the long term. During the years in which some German manufacturers have optimized the cheating software in their diesel engines, China has developed new battery technology and advanced EVs. The result: The cards for the future of the automotive industry will be reshuffled over the next few years.
In this respect, the German automotive industry is more vulnerable than ever in its long history. Germany’s solar industry has already painfully experienced what happens when politicians fail to protect key green industries. We must now prevent the automotive industry from suffering a similar fate – including with tariffs, unfortunately.
Sebastian Bock is Managing Director of Transport and Environment (T&E) in Germany. T&E is the umbrella organization of non-governmental European organizations committed to sustainable transport.
Delicious zongzi 粽子 dangle here at a market in Chengdu. The sticky rice packets are traditionally served during the Dragon Boat Festival. The Dragon Boat Festival is one of China’s most important holidays and falls on the fifth day of the fifth month of the lunar calendar – this year on this Monday, June 10.
Is TikTok the world’s most dangerous app? There are certainly more dangerous smartphone apps than short videos, but TikTok’s high user base and political clout add relevance to any risk. The app has 1.6 billion active users, and it is the primary source of information for many young people.
Reason enough to ask a data security guru: Is it a good idea for Olaf Scholz to present himself with more or less humorous short films on the Chinese app? Many Germans still remember Peter Schaar as the Federal Commissioner for Data Protection. In an interview with Fabian Peltsch, he says: A chancellor in particular should be careful with Chinese apps. In his role as an SPD campaigner, however, he considers their use justifiable – after all, the aim is also to reach young voters. This is where political pragmatism capitulates to potential addiction.
All technological diversity in one engine: The state-owned company FAW is experimenting with a triple drive that can run on gasoline, hydrogen and electricity. Even if an actual market launch seems rather unlikely, it provides valuable experience, writes Christian Domke Seidel. The result could still be used as a ship engine, for example.
Two of our articles today also deal with the EU’s planned import tariffs on Chinese electric cars. After all, it could happen this week: As soon as the European elections are over, the Commission wants to take action.
German Chancellor Olaf Scholz uses TikTok to reach voters. On the other hand, the German government encourages its public servants not to use the app on work devices. Do you see this as a contradiction and a credibility problem?
There is no denying that this is a contradictory practice. The question is to what extent it still makes sense for politicians to use such platforms and why this is justified. When it comes to political party representatives, for example, I believe the interest in shaping opinion prevails. The parties have a constitutional mandate under our Basic Law to help form people’s views.
And they need TikTok for that?
A balance must always be struck here, and the results can certainly differ. If it allows reaching large groups that are otherwise hard or impossible to reach elsewhere, i.e., young people in particular, who are the majority users of this service, then I consider appearing on TikTok to be perfectly justifiable – despite general legal concerns about the service. Even private individuals who express their opinions there can certainly not be forbidden from doing so. However, when it comes to a public authority whose duties are directly bound by law and order, I have serious doubts about the justifiability of its use. Given the risks, it is necessary to take a critical look at whether and how you are active there. So it does make a difference whether the SPD politician Olaf Scholz or the Federal Chancellor is active on TikTok in his official capacity.
What specific risks do you see?
From a data protection perspective, privacy is at risk. People lose control over their data, and there is a risk that someone might be interested in accessing it. In extreme cases, this could be a foreign intelligence service or a party organization of an authoritarian state that evaluates the posts and blacklists authors of critical posts, as we know them from China.
And?
The more users a platform has, the more closely it needs to be scrutinized. This is why the EU’s Digital Service Act requires so-called ‘very large platforms,’ which include TikTok, to meet stricter requirements in terms of transparency and security assessment. This is not primarily about data protection but preventing algorithms from manipulating and exerting political influence. The third aspect is IT security. The German Federal Office for Information Security (BSI) has issued a security warning stating that devices on which apps such as TikTok are installed could be manipulated and confidential information could be accessed.
Does the Chinese origin of TikTok’s parent company present European data protection officers with unprecedented challenges?
The fact that a Chinese platform has achieved such global reach is a new phenomenon. Structurally, however, the problem is similar to most other services offered by countries with inadequate data privacy regulations. Think of the debate about Facebook and Google. The European data protection authorities have repeatedly imposed heavy fines on these companies. But there are also considerable differences. For example, it is significant that we are dealing with the USA as a constitutional state, which cannot be said of China. The USA and Europe have a data privacy agreement and certain common data privacy principles to which Google or Facebook have committed themselves. However, there is no such agreement with China.
Western providers have been blocked in China for years, partly to prevent foreign influence and security risks. Is something similar conceivable in the West?
This should, of course, be examined. Data protection authorities have the option of preventing the operation of certain services as a last resort. In TikTok’s case, the Irish data protection authority is responsible, not the German data protection authorities, because that is where the company’s European headquarters are located. It must scrutinize the practices and can also impose fines. Moreover, even stricter sanctions can be imposed for violations of the Digital Services Act than for data protection offenses.
In both TikTok’s and Huawei’s case, there has so far been a lack of clear evidence to justify banning them and other Chinese technology providers.
Today, the term “Chinese technology” is often used very broadly. I strongly recommend a more differentiated view. You have to look closely at what components are involved. It makes a difference whether Telekom or Vodafone installs an antenna shipped from China or whether a switching center is outfitted with Huawei technology. With the latter, there is a severe risk that sensitive data can be accessed. The risk is even higher if a Chinese manufacturer supplies an entire communications system. The question is always: What are the risks and consequences of using the technology and components in question? And only then comes the question of whether this can be proven at all. The companies and the supervisory authorities – the BSI and the Federal Network Agency, as well as the data protection commissioners – have to closely examine this on a case-by-case basis.
At the TikTok hearing in the United States, the company spokesman stated several times that his company was not obligated to report to the Communist Party. Is that credible?
I don’t find that very credible. As a Chinese company, TikTok’s parent company is bound by Chinese law. And there are very general reporting obligations to the authorities and Party bodies when it comes to China’s interests. The public authorities and the Communist Party themselves are not bound by Chinese data protection law and their surveillance activities are not monitored by courts or independent data protection organizations. If a company wants to be active in such a country, it cannot avoid this. Incidentally, TikTok has so far disclosed very little publicly in this regard.
What do you think is more dangerous regarding data protection and security, TikTok or the flood of Chinese EVs rolling toward Europe?
We must take both very seriously because these cars today fulfill all the key connectivity criteria. By now, we know how much data is being collected, and not just by Chinese cars. Lots of cameras and sensors are used to record not only how the vehicle is operating, but also its surroundings. Because of the corresponding risks, Teslas are no longer allowed to be parked in Berlin police car parks because the cameras could record who is there. Many now think this is less critical if the data flows to the United States. And it probably is. Nevertheless, it doesn’t matter if it’s American or Chinese, Facebook or Huawei, it’s unacceptable for data to be siphoned off everywhere indiscriminately.
Peter Schaar is Chairman of the European Academy for Freedom of Information and Data Protection (EAID). From 2003 to 2013, he was the Federal Commissioner for Data Protection and Freedom of Information (BfDI). He published numerous books on the subject, including “Ueberwachung total – Wie wir in Zukunft unsere Daten schuetzen” (Aufbau-Verlag 2014) and “Truegerische Sicherheit – Wie die Terrorangst uns in den Ausnahmezustand treibt” (Edition Koerber 2017).
At the Vienna Motor Symposium 2024, the Chinese manufacturer FAW surprised with a new engine concept. The new engine runs on both hydrogen and gasoline. It can also be combined as a hybrid with an electric motor. This would allow it to utilize three energy sources.
It is unclear how practical the concept really is – after all, drivers would need two different gas stations and a charging station. However, it shows how willing Chinese manufacturers are to exploit the technical potential for future forms of car engines. It promotes the development of other engine types: for ships, trucks, or stationary engines, for example, in mines or factories.
The background to this bold move: Chinese manufacturers face regulatory hurdles. By 2026, new cars must only consume 4.6 liters per hundred kilometers. And from 2030, the limit will be 3.7 liters. Even hybrid vehicles cannot meet this challenge. However, FAW believes that the combustion engine can be optimized to such an extent that this consumption target can be achieved despite the use of gasoline – in combination with the use of small quantities of hydrogen.
A quick look inside the engine shows what problem FAW is trying to solve. Motor technology involves high-efficiency technologies, designed to maximize the efficiency of combustion engines. One of these technologies is the so-called “active pre-chamber.” The pre-chamber takes up around 10 to 20 percent of the entire combustion chamber. It is normally used to pre-ignite part of the fuel-air mixture. This flame then ignites the mixture in the main combustion chamber.
This allows engines to start reliably, even at low temperatures, run quietly and emit less CO2. In theory. In practice, these advantages have only materialized to a limited extent. The design is complicated, which makes the engine expensive, and the liquid fuel increases emissions disproportionately during cold starts. This is why modern injection systems have largely replaced the pre-chamber in the passenger car sector. Until now. FAW believes that hydrogen can breathe new life into the pre-chamber.
The pre-chamber of the FAW engine requires around five percent of the total combustion energy. A car with a range of around 1,000 kilometers would then need a hydrogen tank with a capacity of around 0.6 kilograms – one-tenth of one in a conventional engine. FAW claims to have significantly improved efficiency and drastically reduced emissions.
The engine can either replace a classic combustion engine or be integrated into a hybrid system. However, this is where the system’s weak point becomes apparent. If a customer has a plug-in hybrid with such an engine, they would have to charge the battery and refuel gasoline and hydrogen. A process that is simply too expensive to have any market opportunities.
Despite problems with the impending tightening of emissions regulations, FAW also sees a long-term future for hybrid drivetrain. These cars play an important role in the New Energy Vehicle (NEV) sector. FAW believes optimizing efficiency will be enough to keep the concept competitive against conventional electric cars (with and without range extenders).
This is mainly due to how emissions are calculated. Like the supplier and automotive industry, FAW increasingly looks at emissions over the entire product life cycle. This means that companies also include production and the CO2 footprint of power generation in their calculations. Due to the high proportion of coal-fired electricity and energy-intensive battery production, pure battery vehicles currently perform worse than hybrid vehicles in this type of analysis in China. According to FAW, this will only change in 2045 with sufficient renewable energies in the electricity mix.
FAW is under pressure in the NEV segment. The state-owned company is growing significantly slower than the market in this segment. Caixin Global reports that the government expects the brand to make noticeable improvements in this segment. While the share of NEVs in the overall market was 32 percent, these cars only accounted for seven percent at FAW. Caixin believes that one reason is that state-owned companies are too timid in their approach; Dongfeng and Changan are also underrepresented in the NEV segment. Private companies are more willing to take risks. This is an accusation that does not apply to FAW with this engine.
Anyone calling for import tariffs on Chinese EVs and batteries these days is not making friends in Germany – neither in politics nor the automotive industry. Nevertheless, there are four reasons that speak for them in order to keep jobs and value added in Germany and Europe in the long term.
Firstly: We need fair competition. While the EU imposes tariffs of ten percent on Chinese EVs, China imposes tariffs of 15 percent on European cars. The imbalance is even more drastic for batteries. While only 1.3 percent is levied in the EU, China imposes almost eight times as high tariffs of ten percent on batteries manufactured in the EU. Because China has also strategically subsidized the domestic EV industry for years, Europe must impose higher tariffs to create a level playing field.
Secondly: Unlike in the USA, it is not a matter of categorically excluding Chinese manufacturers from the European market. On the contrary. The tariffs must be tiered in a way that creates strong incentives for investment in the European market. This applies, in particular, to battery production. Tariffs should be tiered to stimulate their production in Europe while preventing a trade conflict. For example, lower tariffs could apply up to a specific import volume (e.g., 10 to 15 percent of the market), after which the higher tariff would come into force. To create an incentive for local battery cell production, Europe would have to raise tariffs to at least 20 to 25 percent by 2027 in order to close the average cost gap with China.
Thirdly: Although “Made in Germany” still stands for the highest quality when it comes to electric cars, this is not the case for batteries. Even if the success-spoiled German car industry doesn’t like to hear it, what we need today is to reverse the Chinese model from the 1980s. Back then, the Chinese government only allowed manufacturers like Volkswagen to enter the market on the condition of joint ventures with domestic companies. Only those who shared their knowledge were allowed to hope for sales in China. Today, Europe’s manufacturers must learn from their Chinese competitors, particularly in battery cell production. Not only are they more innovative, but they also know how to mass produce new battery technologies quickly. In addition to tariffs, measures for technology transfer and investment in production and training are needed to ensure that value creation and well-paid jobs stay in Europe.
Fourthly: The ghost of a trade war and fear for car manufacturers’ profits hang over all this in the German perception. But even if the companies continue to earn a considerable part of their profits in China, the long-held claim that sales in China pay the salaries of engineers in Wolfsburg is becoming less and less true every year. VW is investing a billion in a research center in Hefei (China). BMW is taking advantage of the more favorable production conditions in China to manufacture the iX3 there and export it to Europe. The large supplier ZF plans to cut 12,000 jobs in Germany while pursuing an aggressive growth strategy in China. In other words: We cannot equate the interests of corporations with the interests of Germany and Europe. A strong, locally producing European EV industry is essential for climate action and jobs.
Meanwhile, Chinese announcements of retaliatory tariffs make this threat seem more real than it is. We should not forget that China is just as dependent on the European market as German manufacturers are on the Chinese market. Nevertheless, there is one important difference: Biden’s decision to multiply US import tariffs on EVs from China to 100 percent strengthens Europe’s hand. Chinese manufacturers have built up enormous overcapacities, which they can now only sell in large quantities to Europe.
This makes them dependent on market access. At the same time, all German manufacturers have been operating large plants in China for decades. For instance, Volkswagen manufactures 99 percent of its sales for China in China. Audi (91 percent), BMW (87 percent) and Mercedes (80 percent) also produce almost all vehicles sold in China locally. These plants and their profits are, therefore, not affected by potential retaliatory tariffs. However, the situation is different for Chinese manufacturers, who are only beginning to gain a foothold in Europe and do not yet operate a single finished plant in the EU.
Politicians in Germany and the EU must now act with strategic foresight. In the short term, import tariffs are a necessary evil to ensure that local manufacturers can catch up technologically and that Europe as an automotive location can survive in the long term. During the years in which some German manufacturers have optimized the cheating software in their diesel engines, China has developed new battery technology and advanced EVs. The result: The cards for the future of the automotive industry will be reshuffled over the next few years.
In this respect, the German automotive industry is more vulnerable than ever in its long history. Germany’s solar industry has already painfully experienced what happens when politicians fail to protect key green industries. We must now prevent the automotive industry from suffering a similar fate – including with tariffs, unfortunately.
Sebastian Bock is Managing Director of Transport and Environment (T&E) in Germany. T&E is the umbrella organization of non-governmental European organizations committed to sustainable transport.
Delicious zongzi 粽子 dangle here at a market in Chengdu. The sticky rice packets are traditionally served during the Dragon Boat Festival. The Dragon Boat Festival is one of China’s most important holidays and falls on the fifth day of the fifth month of the lunar calendar – this year on this Monday, June 10.
