Good morning. Peter Vanham here in Geneva, back from a short Labor Day trip to Germany.
Riding along Bavaria’s idyllic towns and roads this weekend, I could easily see that most people there still stick with the region’s pride: BMW cars. But I could also see the uphill challenge facing Germany’s car industry: EVs and EV infrastructure were few and few in between.
How Germany fares in the EV saga will become clear in the next few years, and it may well become a cautionary tale.
Not too long ago, Audi, BMW and Mercedes were the uncontested kings of the luxury car segment, from U.S. to China. Volkswagen was the world’s largest car maker. But today, the picture looks different. Tesla is the most valuable car company in the world. All-electric car company BYD is outselling Volkswagen in China. And Vietnam’s Vinfast is the industry’s most-hyped newcomer.
You cannot understand why those shifts occurred without grasping the forces at play in German society.
When I first visited Volkswagen’s “Autostadt” 15 years ago, the company blamed slow progress towards cleaner cars on the German consumer. “I can’t sell the customer a Golf if he wants an four-wheel-drive,” Gunther Damme, the executive in charge of sustainability, told me. In more recent years, the same German consumer has been among the most skeptical when it comes to electric cars.
Today, despite almost all German car companies racing to develop electric models, some resistance remains. Germany’s government this year insisted on exceptions to a European deal for all-electric car production by 2035. And BMW will continue selling internal combustion engine cars wherever it is allowed post-2035, CEO Oliver Zipse said last week.
In contrast to Zipse, both Volkswagen and Mercedes CEOs have repeatedly expressed their commitment to an all-electric future. And even though most cars on the Autobahns are fueled by diesel and gasoline, EV sales make up 20% of new car sales in Germany. The new government has also introduced an ambitious plan to roll out EV chargers.
Is such incremental change enough to maintain Germany’s dominance in the car market? We’ll soon find out. No matter how the story ends, it’s sure to become a business school case study—for better or for worse.
More news below.
Peter Vanham
peter.vanham@fortune.com
@petervanham
TOP NEWS
SpaceX backs Musk
SpaceX briefly loaned CEO Elon Musk $1 billion last October, according to internal documents. While the purpose of the loan is unclear, it happened around the time the billionaire was trying to acquire Twitter. Musk has long tapped SpaceX for funds and resources for his other ventures, like Tesla and the Boring Company. The Wall Street Journal
A de facto Airbnb ban?
New York City started enforcing rules against short-term rentals on Tuesday, potentially wiping out thousands of listings in the city. Now, hosts must register with the city, can host a maximum of two guests, and must live in the unit they’re listing. Airbnb has blasted the decision as a “de facto ban,” while the city complains such rentals are a public nuisance. CNN
Arm’s debut
Chip design firm Arm is seeking a valuation as high as $52 billion for its IPO later this month, which would be the largest since EV maker Rivian’s in 2021. Still, Arm’s proposed valuation is below what backer Softbank originally projected a month earlier, at $64 billion. Companies considering a listing are watching to see how Arm’s shares perform post-debut, with one private equity executive suggesting to Fortune that a 20% jump will accelerate the pace of IPOs. Reuters
AROUND THE WATERCOOLER
Leaders like David Zaslav show there’s a dark side to ‘managing up’ by Lila MacLellan
Inflection AI co-founder Mustafa Suleyman: ‘Ban the use of AI in elections–right now’ by Mustafa Suleyman
Europe’s biggest car show was long the stomping ground of German brands—but it’s now ‘become the China show’ by Christiaan Hetzner
Wegovy maker Novo Nordisk leapfrogs LVMH to become Europe’s most valuable company after it takes its ‘miracle’ weight loss drug to the U.K. by Prarthana Prakash
What’s behind Walgreens CEO Roz Brewer’s abrupt departure? by Maria Aspan and Joseph Abrams
Hollywood’s strikes are bulldozing the economy to the tune of 17,000 jobs and forcing a major studio to cut earnings guidance by $500 million by Paolo Confino
This edition of CEO Daily was curated by Nicholas Gordon.
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