Time to Accelerate or Slow Down: How the German Automotive Industry Copes with the Entry of Chinese Electric Vehicles into the European Market

Understanding the acceleration of global energy transitions requires closer attention to the role of international dynamics in socio-technical transitions. In this context, green industrial policy has garnered increasing attention from both business practitioners and policymakers, focusing on navigating structural changes that harmonize economic competitiveness with environmental challenges. A promising case in this regard is the unfolding electric mobility (e-mobility) transition within the automotive sector, where the deployment of electric vehicles (EVs) is evident across various countries, with emerging economies, such as China, playing a significant role in driving global e-mobility transitions. Recent studies in political economy highlight the existence of green industrial policy competition, suggesting that incumbent economies, such as Germany’s automotive industry, may be incentivized by competitive threats from emerging economies to reorient and adapt to technological shifts in green industries. These purposeful policy designs by domestic governments contribute to the global acceleration of energy transitions. However, as demonstrated by recent debates over trade tariffs between the EU and China regarding electric vehicles, it is essential to reconsider the nuanced role of international dynamics, which can act as both a driver and an impediment to domestic socio-technical transitions. Despite this, a significant knowledge gap remains due to the limited empirical evidence extending beyond existing national-level political economy discussions. To address this knowledge gap, we draw on industry-sensitive insights from the global innovation system framework to develop an integrated framework linking international and acceleration dynamics in socio-technical transitions. Drawing on 24 semi-structured interviews conducted between April and June 2024 with industry representatives and experts in the field, our case study investigated how the German automotive industry is responding to the entry of Chinese EVs into European markets by examining how they interpret and respond to international dynamics in the context of national socio-technical transitions. Germany and China, two key economies with established and emerging industrial policy interests in EV technologies, provide a particularly suitable case for understanding the role of international dynamics. Our empirical analysis reveals a nuanced picture: German automotive actors perceive both the latecomer disadvantages and home market advantages. This has led to strategic innovation actions by German OEMs and suppliers, who have shown a strong inclination to mobilise both domestic and international resources, especially those sourced from China. Notably, German firms are leveraging the entry threat of Chinese newcomers both to reinforce narratives that support the introduction of new industrial policies and to justify adjustments to established strategic targets in public discourse. Through these insights, our work contributes to emerging green industrial policy debates within the evolving global energy policy landscape.