When subsidies threaten innovation

The traffic turnaround. Much is being written and talked about. It carries social explosives and if the federal government has its way, then it should finally pick up speed in 2020. So that the citizen can also develop pleasure in it, the purchase premium for an electric car climbs from 4.000 to 6.000 €. However, the subsidies are not helpful for everyone. Because they threaten innovative start-ups.

Sono Motors and Sion prototype
Sono Motors and Sion prototype

On the 5. November it was time again. A new auto summit in the Berlin Chancellery, 4 hours with high-ranking representatives of industry and politics. The result: more subsidies for hybrids and for all-electric vehicles. Government and industry give a green coat, environmental protection is top priority, consumers should buy now please.

Now summit talks in the government headquarters are by no means so that Angela Merkel invites you to a chat with cookies, cakes and coffee. And that in the end there is a result nobody would have expected. Surprised are at most the citizens who learn the latest news on the tablet. Before, there were months of intense lobbying, and the industry knows exactly what it is doing.

What should be an incentive to buy as an additional bonus was priced in advance. Of the greats in the industry who entertain legions of lobbyists in Berlin and Brussels. For the benefit of consumers and for their own sales. To the detriment of start-ups and innovative lateral thinkers. They are not sitting at the coffee party in the chancellery. The 3.000 € own contribution of subsidies are to cope for Volkswagen, Daimler and BMW. For Sono Motors or ego probably less. That's a shame and that's wrong. After all, it is the newcomers who produce the vehicles that are needed if the traffic turnaround is to become something serious.

Both startups build or plan small, light cars. No big, heavy electric vehicles like the established industry. Less is more, rethink, conserve resources. Sono Motors and e.Go tick like this. Apparently not the big ones. Products come from Volkswagen that are just like a Golf. Just stop electrical and digital. Audi understands very little and sends heavyweights to the start, Daimler and the rest are no better. A clear “go on as before”, just with batteries instead of burners.

Rethinking? Does not take place.

Maybe because you don't want to ask the customer to do it. Because marketing and consulting firms believe that they do not want to overwhelm the consumer. A new type of drive could be enough of a burden. Then also smaller, lighter, more flexible? Too much! I think the consumer should have the chance and decide for himself. Small, light, innovative and flexible cars with courage don't come from Wolfsburg or Ingolstadt. If only because small is cheap and low-yield. Passé the times when you got a brave Audi A2 or VW an extreme 1 liter car brought to the streets.

Sono Motors and e.Go are in a price segment below € 20.000. The Sion, which will roll off the production line in Trollhättan, costs € 16.000 without a battery. It’s hard to make a contribution of € 3.000 as a purchase bonus. In the show Quer des Bayerischen Rundfunks, Sono founder Laurin Hahn has a say. The own share threatens the business model. The only option is to forego it altogether or to increase prices. And competitor e.Go? He has already drawn his conclusions. From January 2020 the prices for the e.Go Life will increase by € 2.000. The cheapest model costs € 17.900.

However, plague Sono Motors more worries at the moment. The financing is unclear until further notice, one of the largest crowdfunding campaigns in Germany is running. 50 million € are to be collected by the end of the month. But success is far from certain. This highlights an additional weakness in the system. While China has been flooding innovative start-ups with billions via various instruments for years, Germany remains strangely passive. There is no state risk fund for start-ups. Of course, 8 or 9 out of 10 startups won't survive the first few years. But can we afford to remain passive about massive Chinese subsidies?

“Open source project” from Munich

The compact Munich van is much more than just another electric car. It charges itself with solar cells and it is a kind of “open source project”. It should be accessible to external developers; the workshop manual is accessible to everyone. If implemented in this way, it could be a pioneer for innovation and sustainability. Saab once planned something similar. The IQon Project was referred to as Open Innovation and allowed independent developers to design new features for the vehicle.

The electric car premium is revealed to be a subsidy for the established industry. Who certainly builds very good cars, but lacks courage. If you are serious about protecting resources and the environment, then less has to be more! Courageous start-ups, lateral thinkers, should have a chance. It is already difficult enough for them to bring their products to market.

Innovative start-ups should be promoted in terms of the environment and innovation. Competition is good, the big players can draw their conclusions from it, and newcomers get a chance. The way to the finished product is very costly in the automotive industry. Germany should afford costs and lateral thinkers in order to maintain our industry. The demise of the once proud British auto industry, considered strong and invincible, should be a reminder. Because it too was protected by the state until there was nothing left to preserve.

Germany is prosperous. So rich that our government parks money somewhere between unused. Over the years in the so-called reserves for example. Around 42 billion € are suspected at the end of the year. Some of it could be taken. As seed money for competition and innovation. Then out of blatant confessions facts would. The location Germany can only benefit from it.

20 thoughts on "When subsidies threaten innovation"

  • @ StF,

    I do not want to reproach you. I just wanted to add one aspect to the discussion. The very fact that luxury goods are often given a higher purpose.

    In the case of Tesla this happens repeatedly. We need more products that directly address social and environmental issues. Less of those who are based on the empty and threadbare promise that they would do so in a roundabout way (such as a cross-financing) anyway.

  • You are not allowed to fool online (greetings to the technical mechanics), the striking saying is, by the way, 'Well meant is far from being well done' and should not be in angle brackets (greetings to everyone else).

  • @ Herbert Hürsch

    I'm sorry, I've read my comment three times now, but where I say Tesla will save the world I still don't understand. Actually, I am even of the opinion that a statement like “something like success” is a critical evaluation that is quite understandable, but apparently online communication is only possible with wooden hammer arguments, otherwise nobody will understand you anymore.

    But what I actually think about Mr Musk is, among other things, that he has been thinking quite thoroughly about how he gets his store funded. And he probably came to the conclusion that he will never get enough money for a mass production without having a product on the market.
    And that he obviously has progressed with a small series production of the Roadster, as Google, Apple, Dyson, Faraday Future and who else everything publicly, or under the hand meant that he could build an electric car, but no one can seriously deny. And whether his company survives, is honestly not yet settled.
    I don't know him personally, but what you can read in the press suggests that he has some other human deficits that people like to call “technically brilliant minds”. (I hope the quotation marks are sufficient, or have I just stylized him as a world saver again?)

    If you tell me that I think it would be a good idea to adjust to the given realities, if you want to implement your ideas, instead of thinking that I have a good idea, it has to assert itself, then you can of course, but my experiences are different.
    In any case, if I extrapolate the numbers published by Sono linearly, it looks as if they will reach around € 25.000.000, so they fail. In my opinion they turned the wheel too late, I would still be happy if I should be wrong, but at the moment the bold slogan seems to fit here again.

    Even the fact that lithium-ion batteries are apparently measured with double standards, which in my opinion is not based on any meaningful estimates, is definitely a fact. Lithium & cobalt mining will definitely not stop if electric cars are not produced.

    And if you do not like the old tea, here's a fresh cup for you: If climate change does not turn out to be as bad as predicted, I suspect that we're going to get microplastics to save the organisms living on the planet.
    Well get ...

  • @ StF,

    in advance of my commentary on the info, no thumbs down from me. If there are, they are not from me, not my style.

    Instead, here's a critical remark. I can no longer hear the tale of the cross-financed world rescue through Mr. Musik (or whoever). Already a quarter of a century ago, automobile companies sold us ever larger and faster boxes with the same arguments.

    As image and technology carriers, they would benefit the masses and the environment. Bla bla bla …

    I find it unoriginal and intellectually offensive when this old tea bag is still infused daily after 25 years. This broth simply doesn't taste good - regardless of whether the tea water comes from an electric kettle or another kettle ...

  • Devil stuff, there's probably more to that than you're willing to see.

    As legitimate as the idea of ​​a relatively cheap electric car is to propel e-mobility, it also implies some of the conditions that make it difficult. These include, among other things, the cost-intensive mass production, but also brings the scaling effects that make up the price advantage over the term.
    Maybe in the environment described, the idea of ​​a small batch production is more promising, but of course the idea must be different, otherwise it will not work. To compensate for the relatively high parts prices, you have to offer in a high-margin segment in which low volumes are not a problem, but rather an advantage, so you end up with expensive sports cars or luxury cars.
    Anyway, the only e-vehicle provider that has something of a success, Tesla, did it that way. And at Lightyear you can see in the future whether this concept can also be successful for a solar electric car.

    But that was not the idea of ​​Sono, but they also have to exist in the existing reality. If they can not do it, you can see it as a wicked feint of fate, that with the already much scolded Cybertruck nevertheless a solar charging option should come on the market, but of course for a very different group of buyers.

    And who is against the e-mobility, because the battery production is not particularly environmentally friendly, should ask what happens with all the lithium and cobalt mined, where vehicle batteries in the current sales figures are just a niche application.
    Then you may find that a considerable part is needed for steel, glass, ceramics, lubricants and much more. And the not so small part for the battery production is likely to land at over 90% in the popular electronic gadgets such as mobile phones, tablets, notebooks, digital cameras, Navis, and so on. However, when buying all of these products, most consumers probably do not feel guilty about the waste of South American groundwater or child labor in Congo.

    There may actually be only bad choices, which should make the future exciting, albeit in a way that presumably does not generate anticipation.
    Or adapting reality to the challenges of the future may be the most sensible idea one can have. However, the current policy does not give the impression that this is happening.

    Devil stuff everywhere, despite Christmas ...

  • Thank you for your insight and explanations

  • All devil stuff ...

    everyone says and depending on the direction of faith either the burner or vehemently oppose the e-mobility.

    Tom's reference to innovative and economical burners that have ever existed is very important to me. Even then, it seemed easy to halve the need for liquid fuels in road traffic. In turn, the reduced demand would have enabled a high proportion of biofuels, so we could already have a fourfold better CO2 balance in this sector today.

    Today, we would have a completely different discussion and politics and business could look back with pride on what they had achieved if they had set the right course.

    Instead, everything is now actually the devil, be it the cybertruck or the company car of Berlin's mayor, who just went through the media as a record holder with 408g / km ...

    Forgiving and terrifying at the same time, that everyone is right. There are good reasons to paint the devil on the wall - be it in the form of a 600kg battery or a fuel eater ...

  • With the topic I am Totalverweigerer. I can not win anything in one or the other e-car and digital scrap. I do not understand why you have to impose something on the citizens what hardly anyone wants. There are so many other easier ways to be eco-friendly.

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  • really well written and correct in the core statement.

    i have a lot of insight into companies, including those with brilliant ideas, but since subsidies only go through banks, you can forget it - there is no willingness to take risks. the bankers are frozen in their arrogance and their “better knowledge”.
    I drive my 900er, so I do not need the whole thing, but it destroys good ideas for the future of all our children!
    a customer of mine had to file for bankruptcy three years ago, because a large company has not paid mio for political reasons over 1,7. He has again started his own business, with brilliant ideas, especially in the area of ​​energy savings in the industry.
    this company will also have to close again - because of his past he doesn't get a cent from the banks; They don't even want to apply for federal funding - too much work.
    what does it always mean: everyone can drop, make a difference those who get up again!
    puff cake - it's just a saying.

    a tip: send your thread in exactly this version to mrs merkel - and to the green party.
    less like nothing can not bring it, but maybe at least the remainder function of reflection will work!

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  • Exactly that is the case here, the subsidies distort the Mart at the expense of Sono and eGo!

  • ok, then i got it wrong. I think it's good to give venture capital to start-ups! Perhaps not quite as in North America, where capital is granted easier, faster, but also withdrawn just as quickly. Such a thing would be desirable.
    In order to finance that, the “old” large corporations should not be given subsidies.

  • There should be subsidies until a promising start-up can leave the “nursery”. In other words, it is capital marketable and can independently raise additional funds. There are many possibilities for this.

    Do not get me wrong: I'm not a supporter of subsidies! They are market distorting, but the government has been doing it for years. Mostly in favor of established companies. On the other hand, we have been losing our best founders' heads to North America for decades because there is a sophisticated venture capital scene there. The other side, in this case China, works with non-transparent methods and generously promotes everything that could somehow bring success. And in between we stand.

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  • How long should such a subsidy look or go? What happens if Sion and Co no longer receive subsidies? How durable are such companies without subsidies? The state withdraws sometime, which is correct. Even Opel was then considered not system relevant and was left to his fate.

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  • Man, Tom

    that is brilliantly analyzed and written. I take my hat off again to this style, which so often knows how to summarize difficult topics and the most complex contexts (from politics, economy, subsidies & environment) so elegantly and compactly in a coherent article. This is really inimitable ...

    I miss such a quality in the established and public media painful. How can it be that a blog about a bankrupt car brand is so blessed, while the leading media seems to be dominated by an intellectual humanitarian emergency?

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  • At a certain age, you think zero about a new technology!

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  • The mature citizens denied the current purchase incentives, speaks for the citizen!
    The citizen suspects what kind of e-fantasy he could expect: Unclear battery life, too few e-filling stations and knows the digital pitfalls of everyday life ... with dubious “excuses”.
    In other words, those who use their cars for as long as possible are sustainable. Whereby “long” does not mean “a lot”. 😉
    The lobby is really different: sell everything, then everything will be fine. Frightening!

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  • Excellent article with a clear message to politicians and industry! It needs no further comments on my part. Only the call to read this article in peace and to be on.

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  • I'm not going to buy an electric car or a plugin for tens of thousands of euros. In the meantime, most people do not know that electric cars are as environmentally friendly as the politicians and established manufacturers want to tell us.
    First, I will wait and see which drives will actually prevail in the next one.

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