Ex-VW CEO Warns Against Overestimating Chinese EVs

As German automakers work to preserve their standing in the global automotive industry, former Volkswagen Chairman Herbert Diess has voiced concerns about the intensifying competition from Chinese electric-vehicle makers while expressing confidence that German manufacturers can recover from a recent decline in sales, particularly in China and within the premium market sector.

Speaking on German public broadcaster ZDF’s Markus Lanz talk show, Diess, who led VW from 2018 to 2022, cautions against overestimating Chinese EVs and underestimating Germany’s own automotive industry. 

His remarks come at a critical time for German automakers, as Chinese manufacturers aggressively target the European market.

Despite China’s rapid advancements, Diess emphasizes that Germany’s automotive industry remains resilient. “The world isn’t set up for us Germans to lose by default,” Diess says during a discussion with automotive experts and Christian Dürr, parliamentary group leader of Germany’s Free Democratic Party. “The automotive landscape we represent is still open for a second round, and we’re doing our homework again.”

In response to China’s entry into Europe, the European Union has proposed additional import tariffs on Chinese-made EVs to protect European manufacturers facing stiff competition from lower-priced Chinese models. The tariffs aim to address potential market distortions resulting from what European Commission President Ursula von der Leyen describes as “heavily subsidized Chinese electric vehicles.”

Diess paints a stark picture of the Chinese EV market, characterizing it as a challenging space with little profitability. “The Chinese market is a disaster,” he says bluntly. “Aside from one manufacturer, no one is making money there. The competition is brutal. BYD is profitable, but not enough. The rest are burning through their capital.”

While Chinese carmakers are eager to penetrate Europe, Diess notes, their success has been limited. “They are losing a lot of money trying to break into Europe. In the U.S., they don’t even have a presence. There isn’t a Chinese car you could point to and say, ‘That one’s better – better range or faster charging.’”

Nevertheless, Diess remains optimistic about German carmakers’ prospects, highlighting their deep knowledge of both global and Chinese markets, where they have been prominent players for the past two decades. “Paranoia is good for survival,” Diess remarks, “but it’s not time to dig in and declare defeat. We haven’t lost. German manufacturers know exactly what the Chinese consumer wants, and they’ve succeeded in satisfying the market.”

Diess urges the German automotive industry to commit fully to the EV transition. “A German philosopher once said, ‘If you want to act, you have to close the door to doubt.’ It’s time for a clear, unwavering decision for the electric car – no ifs or buts.”

The urgency of this shift was clear at the recent 2024 Paris Motor Show, where Chinese carmakers including BYD, GAC, Leapmotor and XPeng took center stage alongside lesser-known brands such as Aito, Forthing and Hongqi. Each showcased their latest electric models, underscoring the growing competition facing German manufacturers.With stakes higher than ever, the German automotive industry’s ability to withstand this competitive onslaught from Chinese EVs could determine the future of Europe’s entire automotive sector.