German carmakers ignored electric vehicles, banking instead on old diesel. The same firms also failed to see particle filters and catalytic converters coming. Craig Morris takes a look.

Why have German companies reject new technology that would make cars cleaner? (Photo by Mike Birdy, edited, CC 1.0)

Back in 2004, German automobile makers came under pressure. The EU’s Euro 4 standard would come into effect the next year, cutting admissible particle emissions in half. French carmakers had already shown how to respond; by 2000, they already offered particle filters that removed 99% of particles from the tailpipe. The German response? “We will offer the stupid little filters in all cars by 2009,” the CEO of VW stated in 2004 (in German).

They had to. By then, the EU wanted to make Euro 5 mandatory, thereby cutting particle emissions by 90%. There was no way around the French particle filters. But why the disdain?

In 2007, German researcher David Krahlisch published a short book entitled Lobbyismus in Deutschland (Lobbying in Germany). As he documented, the philosophy among German carmakers was the same in the 2000s as it was previously with catalytic converters. In both cases, a new technology made cars cleaner, but the German companies argued (correctly) that the new equipment would make cars more expensive and increase fuel consumption.

The German public wanted particle filters—by 2007, suppliers were making them around the clock to meet demand. Some 80% of Mercedes buyers in Germany, for instance, insisted on the filter. (I purchased a Skoda diesel in 2008 specifically because it had one.) In contrast, only 2% of French Mercedes buyers ordered the filter that year.

It’s a strange reversal: German firms not interested in clean tech that consumers want. But the situation is indicative of the overall energy transition, which has been driven by citizens and newcomer firms, not Germany’s best engineering giants.

The low demand for the filter among the French also warrants an explanation. Krahlisch only says that the French firms saw the global market for clean cars coming. Apparently, French carmakers are green, but the public isn’t. Having lived in France for a year (and 30 minutes from the border for 25 years), I know that’s not true. Most likely, the small number of French buyers who purchased a Mercedes cared more about performance than the environment. Let’s admit it: buying a German luxury car is not the first thing that that comes to mind when we want to protect the planet.

So I asked Krahlisch what whether he sees a connection to the current diesel scandal:

“For me, the clearest connection relates to responsibility. The ‘little filter’ was obviously not the only thing that German carmakers think is stupid; they apparently also feel the German public and public officials are stupid. Unlike American consumers, the Germans are given short shrift as the executives of the companies pursue salami slicing. They are not interested in the environment or social responsibility—such as towards employees. If we want to fundamentally change the culture of German carmakers, we need to cut insurance for executive board liability. The Japanese Kanban system also provides better checks and balances along the supply chain. And we could also copy Japanese modesty.”

At the same time, I don’t think customers can be let off the hook entirely. There is obviously a market for both cleaner technology and luxury items. German carmakers have focused excessively on the latter—and the bet paid off until recently. At present, the German public still seems reluctant to buy an EV (we will come back to that in a future post).

If we want to change German car culture, it’s not enough to blame carmakers alone—consumers have to show that they are fed up. In the case of diesel cheating, Germany looks bad and America good, but the underlying conflict is not one of national culture (see my previous post), but corporate executives who politicians have allowed to cheat with indemnity. If CEOs get away with it, there’s something wrong with the system. That includes German and European politicians for protecting these firms, and consumers for continuing to let executive boards think the old strategy still works.

Craig Morris (@PPchef) is the lead author of German Energy Transition. He is co-author of Energy Democracy, the first history of Germany’s Energiewende, and is currently Senior Fellow at the IASS.