VW, BMW, Mercedes showcase new EVs to stem downturn as NGOs warn of greenwashing

Against the backdrop of falling profits and shrinking global market share, German carmakers VW, BMW, and Mercedes unveiled a new generation of electric vehicles at this year’s IAA mobility show in Munich.

After disappointing sales of earlier models and investments worth billions of euros, the new vehicles promise longer ranges and faster charging times, alongside other innovations. Industry experts warn the models - including BMW’s “Neue Klasse” – may represent the carmakers’ last chance to turn the tide.

The combined market share of the three groups in the most important markets - Europe, the US and China - has fallen below 20 percent for the first time in decades, according to calculations by business daily Handelsblatt.

Of the approximately 1.2 million jobs in Germany's leading industry, 150,000 to 220,000 are at risk by 2030 due to tariffs, spiralling costs, and geopolitical tensions, consultancy Oliver Wyman warns in a report seen by the paper.

McKinsey gave a similarly bleak outlook. “The transition to electric mobility and software-based vehicles, unfavourable location conditions, new competitors and trade conditions could put up to a third of the industry's value added – 440 billion euros – at risk by 2035,” the consultancy wrote in a recent report quoted by Handelsblatt.

Last-ditch attempt?

The carmakers face massive pressure to finally master the shift to electric mobility and related challenges such as digitalisation, said Fabian Brandt, head of Oliver Wyman in Germany. “German carmakers must act now, while their coffers are still full. Otherwise, they risk ending up like many suppliers, who lack the capital to transform,” Brandt warned.

But contrary to the carmakers’ enthusiastic presentations at the IAA, they might have shifted down a gear when it comes to switching to electric drives. The number of industry job openings with a focus on electric mobility has declined sharply over the past two years, according to an analysis by the Ifo economic institute. “The development of labour demand in green jobs indicates that structural change is slowing down significantly,” said the institute’s Oliver Falck.

A report by green mobility NGO Transport & Environment (T&E) also found that European carmakers had “taken their foot off the gas” in the transition. “Europe now faces a decisive choice: to either lead the global BEV [battery electric vehicle] race and confidently enter the electric age or risk falling behind in the fossil fuel era,” T&E said, while stressing the shift remained on track thanks to cheaper batteries and better charging coverage, “despite carmakers’ attempt to slow down the EV market”.

Greenwashing accusations

Environmental groups accused the carmakers of deceiving the public with their presentations at the global car show. “German car manufacturers want to use the IAA Mobility as a fig leaf to conceal their fossil fuel-based business model,” said Jürgen Resch, head of NGO Environmental Action Germany (DUH). “Despite grandiose announcements about more e-mobility, the IAA remains primarily a greenwashing spectacle.”

Resch added that the automotive industry was lobbying aggressively against existing climate protection rules at the EU level, such as minimum CO2 standards for combustion engine cars.

Friends of the Earth Germany (BUND) took a similar stance. “While car companies present themselves as innovative and modern at the IAA, the same companies and their lobby organisations in Brussels are working to turn back the clock.”

BUND called for a joint effort between the government and the carmakers to finally provide small and affordable electric cars rather than luxury models.

Car summit in the chancellery

The car show also added fuel to Germany’s political debate about how to deal with the industry crisis. Chancellor Friedrich Merz has said he plans a “car summit” to discuss the steps that are necessary to halt the relative decline.

Bavaria’s premier Markus Söder, a member of the CSU, sister party to Merz’s CDU, renewed his call to reverse the EU’s 2035 ban on the sale of new combustion engines.

“The combustion engine has a future with synthetic fuels and new technologies. The EU 2035 combustion engine ban puts hundreds of thousands of jobs at risk,” Söder told the newspaper “Bild am Sonntag”, adding that the car industry formed the “heart of our economy – without cars, there is a risk of collapse.”

There is broad consensus that synthetic fuels, also known as e-fuels, will not play a significant role in road transport because it would be far too expensive. 

In reaction to Söder’s comments, industry expert Ferdinand Dudenhöffer, head of the Center Automotive Research (CAR), warned that re-opening the debate about the 2035 combustion engine phaseout would only unsettle potential car buyers and depress sales further.