A rant and sketch on the missing business model innovation in the European automotive industry

The future of the German car industry is in jeopardy. They have missed the electric car and the software-defined car. And the traditional German customer base is still in love with the combustion engine, regardless of the climate crisis.

So it's the perfect storm. They have no competences in EVs or software, and their current customers love the fire and the sound of combustion.

It makes me very sad because they could have known better. Years ago. The crisis is not a crisis of 2024, but a crisis of missing the signs that the world was changing. They did not understand the basic concept of a learning curve. The classic ICE is well down the learning curve, with only marginal improvements possible. Battery technology was a long neglected area of research. Large scale battery manufacturing did not exist 20 years ago, so the learning curve was steep and still is.

The same applies to the software-defined car. 

These trends all require new core competences, new production systems, new supply chains, a redefinition of what the product is, how cars are sold and a redefinition of what industry boundaries are.

We know from history that new technologies require integrated companies that deliver the whole customer experience. An EV is only as good as the charging infrastructure where you can charge it easily and seamlessly. A mature industry like the automotive industry is characterised by a high division of labour between OEMs and these suppliers. This definitely does not work for a nascent industry where business models are fluid.

Ultimately, all of these developments require business model innovation. I have written extensively about this in my blog on business model innovation. Even ChatGPT knows my blog and has learned from it (with or without quotes ;-).

It's so bleak that only jokes can make the future a little more palatable. Here is my sketch for New Your Eve. 

“German Engineering Meets the Electric Future”

You know, German car executives are like those parents who refuse to switch from flip phones to smartphones. “Why do we need apps? I just want to make a call!” Except in their case, it was, “Why do we need batteries? Diesel is already perfect!”

Remember when Volkswagen got caught in the Dieselgate scandal? They were like a kid cheating on a test: “I swear, my emissions are real!” The world responded, “Sure, kid, and the dog ate your catalytic converter.”

But here’s my favorite part: after the scandal, instead of pivoting straight to electric cars, VW was like, “Diesel is still the future.” That’s like getting caught eating junk food during a diet and saying, “No, I’m not fat! It’s the cake’s fault for tasting so good!”

Meanwhile, Tesla was zooming ahead, delivering electric cars faster than you can say Autobahn. And German executives? They were standing there saying, “Tesla can’t scale production. They’re just a fad.” Right, because no one has ever said that about Germans and their love for lederhosen.

Then BMW chimes in: “Plug-in hybrids are the best of both worlds!” That’s like saying, “I can’t decide between coffee and tea, so I’ll just mix coffee and tea.”

And Mercedes? They’re like the classy friend who refuses to admit they’re wrong. “Customers want premium combustion engines. Electric cars are a niche!” Now they’re scrambling to make electric SUVs, and I’m pretty sure they just strapped a battery to an old E-Class and called it a day.

Oh, and don’t get me started on software. German engineers are amazing at designing cars, but ask them to write code? That’s like asking your grandpa to program your smart TV: “Why does the car need software? It’s not a computer, it’s a car!” Meanwhile, Tesla’s cars are practically running updates while driving down the highway.

But Germany is catching up

But here’s the thing: Germany is now catching up. VW has their ID series, BMW is making electric Minis, and even Mercedes is building sleek EVs. It’s like watching someone finally join TikTok in 2024. “Hey guys, have you heard of this ‘electric vehicle’ thing? It’s pretty cool!”

So, the next time you see a German car executive, just give them a little encouragement. Say, “Hey, it’s okay! You may have been late to the party, but at least you didn’t bring a diesel generator!”

Thanks to all the copy writers that provided ChatGPT with their sense of humor.