German carmakers are under threat from rising restrictions in energy policy that could force auto giants like Volkswagen, BMW and Daimler's Mercedes to move production outside of Europe, Forbes reported.
Lawmakers in Germany are strongly pushing the green agenda, aiming to end nuclear power in the country by 2022 and reduce greenhouse gas emissions by 95 percent (compared to 1990) by 2050.
As the country heads toward a long-term future with no carbon dioxide emissions, some are concerned that the shift could be detrimental to the auto industry. Germany is leaving behind nuclear power while wind and solar power technologies are still in initial stages.
Automakers and other manufacturers may look to the United States to outsource production, according to some industry experts.
"Already some lobbyists for the automotive industry have indicated that if the issues surrounding energy costs are not resolved, they might be forced to outsource to other countries where energy costs are much lower," said Peter Fuss, a partner at consultant EY's Global Automotive Center in Frankfurt, Germany.
"If you look into the whole value chain in the automotive industry there are many processes which need a lot of energy-making: engine blocks, transmission, stamping and even in the plants where you assemble, you need a lot of energy to run paint shops and there's a lot of automation where you have robotics, or areas where you glue space frames for cars," Fuss told Forbes.
While he supports the zero emissions goal, Fuss believes Germany is pursuing it too rapidly. The U.S. has "the inside track" if automakers can't control production costs and need to outsource, he said.
"The German (auto makers) are continuing to localize more production, mainly to the Americas because the market there is growing and they need natural hedging to cut foreign currency risk. And energy costs, especially in the U.S., are expected to stay low because of fracking. So China is not as attractive from an energy cost perspective like the U.S. because China has not that much of natural energy resources," Fuss said.
Others disagree that the swift shift to zero emissions will damage the auto industry, instead saying that German automakers will find greater success long-term as the world switches to renewable energy sources.
According to Professor Ferdinand Dudenhoeffer of the Center for Automotive Research at Germany's University of Duisberg-Essen, German automakers will have the best competitive position in the long run as they forego fracking and similar energy sources for the more expensive renewable ones.
"Countries going for fracking and natural gas are just buying a little bit of time--maybe five or 10 years. However I think countries which go for renewables now will be in a better place than those like the U.S. which don't," Dudenhoeffer said.
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