Strategic Sabotage? How a German Carmaker Delayed EV Innovation—and Is Now Facing a Crisis

In an era where electric vehicles (EVs) are rapidly reshaping the automotive industry, some legacy automakers have found themselves at a crossroads. One major German carmaker, which once dominated global markets, is now struggling to maintain its position in the face of increasing competition, particularly from Chinese EV manufacturers like BYD. Recent developments, including factory closures and plummeting sales, highlight how a deliberate strategy to delay EV adoption has left this automotive giant on the back foot.

A 2015 internal presentation available to Truthlytics revealed that despite having the capability to produce competitive electric vehicles, the company slowed down its EV development, shifted the costs of infrastructure onto external partners, and focused on accessing customer data. This short-term strategy, aimed at protecting investments in their traditional combustion-engine vehicles, is now coming back to haunt them as they face increased competition, declining market share, and the first-ever planned factory closures in Germany.

Capping EV Capabilities to Protect Gas-Powered Cars

In 2015, internal documents from the German carmaker revealed that it had the technological ability to produce electric vehicles with far greater range than what they ultimately released. Rather than competing directly with industry leaders like Tesla, the company chose to limit the range of its EVs, capping their capabilities at around 100 kilometers per charge. The reasoning was clear: if consumers had access to electric vehicles that could rival gas-powered models, they would have little incentive to keep purchasing traditional combustion-engine cars.

This decision was rooted in the company’s significant investment in its gasoline vehicle production facilities, many of which were designed to operate for decades. The carmaker had recently poured massive resources into upgrading these plants, expecting them to generate profits over the next 30 years. Rapidly shifting to electric vehicle production would have undermined this investment, so the company deliberately slowed its EV rollout to maximize returns from their traditional models.

Shifting Costs to Partners and Collecting Customer Data

The company’s 2015 strategy also included a directive to avoid direct investment in the charging infrastructure necessary for widespread EV adoption. Instead, the plan was to shift these costs onto external partners, such as governments and energy providers. By doing so, the company could appear to support EV growth while minimizing its own financial exposure.

At the same time, the carmaker focused on securing access to customer data through partnerships and contracts. This data, collected from the use of electric vehicles, was seen as a valuable asset for the future of mobility, particularly as the industry moves toward connected and autonomous vehicles. However, this focus on long-term data strategies came at the expense of near-term innovation in EV technology and infrastructure.

Facing the Consequences: Chinese EV Makers Take the Lead

Fast forward to 2024, and the consequences of the company’s strategy are becoming painfully clear. Chinese EV makers, particularly BYD, have surged ahead, offering affordable, high-performance electric vehicles and capturing significant market share in Europe. The German carmaker, by contrast, is struggling to compete in the fast-growing EV market, which it once could have led.

BYD and other Chinese manufacturers have successfully scaled production and innovation in ways that the German carmaker has not. While the German automaker focused on protecting its traditional gas-powered vehicles, its Chinese rivals fully embraced electrification, positioning themselves as global leaders in the e-mobility space. This has left the German carmaker in a defensive position, playing catch-up in a market it could have dominated had it embraced EVs earlier.

Factory Closures: An Unprecedented Crisis

For the first time in its history, the carmaker is now facing the possibility of closing factories in Germany. This development, once unthinkable for a company that has long been a symbol of German industrial strength, underscores the severity of the current crisis. The company’s “employment guarantee” for workers, which was set to last until 2029, has been abandoned as part of a broader restructuring plan aimed at cutting costs and dealing with the fallout from declining sales.

Sites like the Wolfsburg plant, one of the company’s largest, are now under threat as the company grapples with how to remain profitable while transitioning to electric vehicle production. The company’s slow pivot to EVs has resulted in underutilized production capacity at plants designed for gas-powered vehicles, forcing the automaker to consider drastic measures to stay afloat.

Public Questions, Private Knowledge

As news of these factory closures spreads, public scrutiny is mounting. Consumers and industry analysts alike are questioning how a company with such a rich history of innovation could fall so far behind in the EV race. However, internally, the reasons are well understood. The 2015 strategy of intentionally holding back on electric vehicle development and avoiding investment in charging infrastructure has come full circle.

While the company tried to deflect responsibility by blaming infrastructure gaps and external factors for the slow adoption of EVs, it is now clear that these were the direct result of their own decision-making. Their reluctance to fully commit to electric mobility has not only cost them market share but also led to the very factory closures and job losses they sought to avoid.

The Long-Term Cost of Delayed Innovation

The carmaker’s strategy of delaying EV innovation in favor of short-term profit protection now stands as a cautionary tale for the entire automotive industry. By focusing on preserving its traditional gas-powered vehicle business, the company missed a critical opportunity to lead in the electric vehicle market. Now, it faces fierce competition from Chinese manufacturers who have capitalized on the growing demand for EVs, leaving the once-dominant German carmaker scrambling to catch up.

The rise of BYD and other Chinese EV makers highlights the long-term risks of holding back on innovation. While these competitors fully embraced electrification and invested heavily in building infrastructure and optimizing EV performance, the German automaker prioritized legacy operations and delayed the inevitable shift to electric mobility.

A Future in Doubt?

As the carmaker moves forward, it faces an uncertain future. With sales numbers declining and factory closures looming, the company is at a critical juncture. While it is now making a push to ramp up its EV production, the question remains whether it can regain the ground lost to more agile competitors. The company’s slow approach to electrification, coupled with its current financial and operational struggles, has put it in a defensive position in a market increasingly dominated by innovators like BYD.

For legacy automakers, the lessons from this German carmaker’s experience are clear: delaying innovation to protect existing business models can have serious long-term consequences. As the industry continues to shift toward electric vehicles and sustainability, companies must be willing to embrace the future—or risk being left behind.