News
15 Aug 2019, 12:09
Sören Amelang

Carmakers and E.ON showcase Germany's innovation failure - opinion

Spiegel Online

VW, BMW, Mercedes and utility E.ON are prime examples for German companies' innovation failure, which is partly to blame for the fact that the country is currently on the edge of an economic recession, according to Spiegel Online columnist Sascha Lobo. "German carmakers may build the most efficient diesel engines in the universe. But not a single one of them is among the 10 companies forecast to sell the largest number of electric cars in 2019," Lobo writes. "The market for internal combustion engines will detonate, and German companies will be hit the hardest." E.ON is an example of the regularly seen "absurd total failures" on the DAX, Germany’s most prominent share index, Lobo adds. While "real innovation explosions" are taking place elsewhere in the energy sector, E.ON's 2018 balance sheet records R&D expenditures totalling just 2 million euros, compared to total sales of 30 billion euros.

German companies failed to realise in time that in the future, the real money will be made with software rather than hardware, that steady product innovation is very different from inventions that revolutionise an entire market, and that their comparatively low investments are a "catastrophic dead end”, Lobo writes. Germany's economy shrank by 0.1 percent in the second quarter of 2019, according to data released Wednesday.

The amount of research and development activities in the energy, water and waste industries has declined in recent years, and only a minority of companies is actively engaged in such activities, the German Institute for Economic Research (DIW) states in its recent report. Energy companies instead buy innovations from other sectors, the DIW writes.

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