Competitors, but sometimes allies, are China and Germany in electrification. Even the head of Porsche appeared at the Beijing Motor Show to eager customers. “Do you want to get into a Porsche Macan and test it? It is an electric model of excellent design and excellent quality…” The invitation to the Chinese visitor who is curious about the Porsche booth at the Beijing Motor Show comes from the company’s general manager, in person. Oliver Blume, head of Volkswagen Group and Porsche, was in the Chinese capital to promote his products and seek strategic alliances.

But the prospective customer is not just anyone. This is Robin Zheng, head of battery manufacturer CATL, one of China’s richest businessmen with a private fortune estimated at $44 billion. His company is one of the largest suppliers of batteries for the German car industry. Years ago, the production of lithium-ion batteries for electric vehicles began in the state of Thuringia. Among others, it also supplies Porsche.

Germany-China interdependence

“The new model from Germany is good, but is it a bit expensive for the consumer?” asks Robin Zheng. It’s a matter of perspective. The price of the Porsche Macan starts at 125,000 euros. Oliver Blume asks Robin Zheng if he would be interested in buying an entire fleet of Macans for his company. “I’ll do that too,” Zheng replies, with Blume pointing out, clearly pleased, that this is a high-quality product.

A German product, featuring a Chinese signature lithium-ion battery. A typical example of the interdependence in which the German automobile industry, the “pride” of the country, and its Chinese suppliers have fallen.

It was not by chance that Oliver Blume took on the task of personally promoting the presence and prestige of Porsche at the Beijing Motor Show. In 2001, he had completed his PhD at the Automotive Institute of Tongzhi University in Shanghai. His thesis supervisor was Wang Gang, who for his part had done his doctorate in Germany while working for ten years in Audi’s research department. He later became Minister of Research and Technology in China and is considered the “father” of electric mobility in the country.

China’s car market is booming

Despite occasional economic difficulties, car sales are growing in China, according to a report by the German Association of the Automotive Industry (VDA), published at the end of April. According to the authors of the report, “the Chinese car market of vehicles recorded 4.8 million new sales in the first quarter of the year, a number increased by 13% compared to the corresponding period last year.

Volkswagen was the first German car manufacturer to build a production plant in China already in the 80s. The Santana and Jetta models made their appearance everywhere in China. In the meantime, however, competition is intensifying as more and more Chinese manufacturers enter the market. In recent years, sales of eco-friendly electric vehicles aimed at the ever-growing middle class have been increasing, particularly in Beijing and Shanghai. Now the Chinese want to conquer the international markets with their electrified models, which are exported all over the world, at affordable prices.

EU research on subsidies

The European Commission even believes that the prices … are too affordable. In fact, Commission officials suspect that the Chinese car industry is benefiting from state subsidies in such a way as to distort free competition with the corresponding European models. In March, Commission President Ursula von der Leyen announced that she was launching an investigation into imports of electric vehicles from China and “where unfair competition to the detriment of European companies is found, we will respond decisively.”

However, no European car industry has asked Brussels for such an investigation. In fact, the representative of the German Association of the Automotive Industry (VDA), Hildegard Müller, speaking to DW, says that she treats the Commission’s initiative “with a critical attitude” and points out that “China plays a decisive role for the successful transition to electrification and digitization. A trade dispute would jeopardize the transition process. Additional tariffs and other anti-dumping measures do not meet the challenges of the European and German car industry.”

Chinese Trade Minister Wang Wentao also expresses his opposition to possible protectionist measures by the Commission, even accusing Brussels of “pharisaism” in efforts to achieve climate goals. “With one hand they are raising the flag of the green transition, with the other hand they are threatening us with the bat of punitive measures for Chinese cars,” argues Wang Wentao, who at the same time praises the electrification partnership with the Germans so far as a “bright example” for industrial cooperation between China and Europe.

At the Beijing Motor Show, the head of the Volkswagen Group, Oliver Blume, confirms the positive outlook. “We have a great partnership with CTLA who produce lithium product batteries at their factory in Germany,” he says. “We are satisfied with the quality of the battery and with the joint design we have done, especially for this particular model. This way we can offer our Chinese customers a long range and a shorter charging time.”

Edited by: Yiannis Papadimitriou