German car manufacturers issue warnings — China dominates the German automotive industry with German money
German car companies are rapidly losing their position in China, having lost nearly half of their market share since 2021. Despite rising geopolitical tensions and everyone talking about reducing dependence, German companies are increasing their investments there instead of cutting them back.
In 2024 alone, German investments in China rose to 5.7 billion euros, of which 4.2 billion euros came from the automotive sector — a massive increase of 69 percent. Political figures like Friedrich Merz warned companies that the risks would fall solely on them if this bet collapsed.
The shift is back to the race for developing electric vehicles. The acquisition of batteries and the reduction of production costs are driving companies like VW, BMW, and Mercedes to move essential parts of their development and manufacturing operations to China. What was previously aimed at the local market has now become a major base for global exports, through joint manufacturing partnerships.
But these partnerships pose a significant dilemma. Chinese partners typically own 50 percent of the project, meaning that half of the profits — including export profits — go directly to China. Analysts like Michael Dunne consider this a "catastrophic strategic mistake," emphasizing that German car companies risk losing control over their future.
While Western companies are relinquishing their profits and technologies abroad, Chinese car manufacturers are aggressively expanding their presence in Europe. The three largest Chinese manufacturers are buying land and establishing new factories on the continent, where the profit margin per car is much higher than in China or the United States. As the former chief strategist of VW said: "Big money is made here — but by others."
The paradox is clear: Western companies give up half of their profits and influence in China, while Chinese companies in Europe retain 100 percent of their profits and complete control over their production.