Posted originally on Jan 21, 2025 by Martin Armstrong 

Germany’s failing auto sector may prove to be an integral power play for China, as Chinese OEMs are eyeing soon-to-be vacant Volkswagen (VW) factories. Volkswagen plans to close at least three factories by 2027 due to declining sales amid the country’s exigency to eliminate fossil fuels.

Germany once looked to China to offload vehicles, but Chinese-made EVs are drastically more affordable than anything Germany could produce. China provides subsidies for their auto manufacturers, who are able to produce every part necessary for autos domestically. More importantly, Germany has abandoned economic objectives for climate change objectives and believes it must reduce carbon emissions by 65% within a 5-year period, followed by an 88% reduction into 2040 before meeting gas net neutrality in 2045. China has no such restrictions.

China’s own auto industry grew 156% over a two-year period from 2021 to 2023 after exporting 4.14 million vehicles last year. China is not adhering to the climate change agenda, and those same regulations derived from fictional data are not strangling China’s energy-dependent sectors. Tariffs are preventing the Chinese from offloading EVs to the West.

Chinese OEMs are discussing bypassing some tariffs by producing vehicles directly in Germany. One anonymous source told Reuters that a Chinese manufacturer already has plans to purchase a factory in Osnabrueck.

Stephan Soldanski, a union representative from Osnabrueck, said that he believes union workers would have no problem working for a joint venture. The VW closures alone are expected to reduce the workforce by at least 2,500, with 120,000 already receiving a large pay cut ahead of closures. Soldanski also noted that workers would want to continue producing VW vehicles, calling it a “key condition,” but Germany would need to be willing to allow China to infiltrate its most iconic auto producer.

“We are committed to finding a continued use for the site. The goal must be a viable solution that takes into account the interests of the company and employees,” a VW spokesperson said without providing specifics. The company would save money if they sold rather than shut down, but the company’s best interest clearly does not align with the nation’s best interest or the EU’s.

“China has introduced a series of opening-up measures to create new business opportunities for foreign companies … It is hoped that the German side will also uphold an open mind, (and) provide a fair, just and non-discriminatory business environment for Chinese firms to invest,” a spokesperson from the Chinese side of the negotiating table told Reuters.

It would be monumental for China to take on a stronghold of Germany’s auto sector. Lawmakers are certainly devising ways to prevent this from taking place. Forget Chinese influence, if China were to begin overtaking Germany’s most prominent sector, the entire EU would be at risk. I do not believe Germany or the EU would allow this to happen, as the entire West has made it clear that China is their top competitor, if not an outright enemy. Governments see China’s rapid rise and are desperately attempting to prevent it from becoming the next financial capital of the world.