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VW brand CEO, Thomas Shafer, says Europe, Germany in particular, is “rapidly losing” its competitiveness as it falls behind in the race to a clean energy economy.

VW CEO urges clean energy initiatives

According to VW’s Shafer, “Europe lacks price competitiveness in many areas” due to higher energy prices and limited supply chains.

Energy prices in Germany hit a record high in August 2022 after the war in Ukraine sent shock waves across the gas and oil industry. Germany was among the hardest hit, with the highest reliance on Russian gas among EU members.

The supply chain disruptions brought about by the pandemic are being intensified by the war, driving material and energy costs higher. Volkswagen has had to reduce energy consumption while implementing other cost-cutting measures to compensate.

With new leader Oliver Blume at the helm, Volkswagen has cut ties with several projects, including writing off a 1.9 billion euro loss on its investment in self-driving start-up Argo.

Despite its best efforts, VW stands at a disadvantage, according to the brand’s CEO. Shafer wrote in a LinkedIn post:

The fact is: On the international stage, Germany and the European Union are rapidly losing their attractiveness and competitiveness. The USA, Canada, China, Southeast Asia and regions like North Africa are forging ahead. We are treading water. I am very concerned about the current development regarding investments in the industry’s transformation.

He added the transition to a clean energy economy needs to be “urgently prioritized” and that, unless they are able to reduce energy prices, “investments in energy-intensive production or new battery cell factories” will be nearly unviable.

Shafer added the example of the Inflation Reduction Act in the US, which is designed to lower energy prices and establish clean energy through substantial incentives and investments.

The IRA bill has generated over $40 billion since passing in August in investments to ensure an adequate domestic supply of critical EV materials and support a sustainable transportation industry.

Volkswagen’s CEO says “new strategic instruments” need to focus on long-term technology development rather than a short-term ramp-up.

Electrek’s Take

Germany intends to generate 100% of its electricity needs from clean energy sources by 2035, and there has been talk of state guarantees for renewable investments.

German economy minister, Robert Habeck, spoke last week at a summit with renewable energy representatives, saying:

It might make sense for the state to step in with a guarantee and say ‘you can order before the approval is there’, then the ramp-up of the industry will be correspondingly faster.

He also talked about supporting the transition to clean energy with local production, adding “wind turbines or solar panels” will not have to be shipped halfway around the world.

VW brand CEO Shafer says the company is ready to do its part in solidifying Europe’s position as an industrial and technological powerhouse.

Do you agree with VW brand’s CEO? Does the EU need to do more to speed up the clean energy transition? Or is VW just looking for new incentives in its home country (like new subsidies, perhaps)? Let us know what you think in the comments.

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