History will be written on Nov. 4 at the VW plant in Zwickau, Germany. Anyone lucky enough to recently visit the factory, which is sealed behind blue rolling doors, entered into a secret world, a hidden industrial laboratory to which only a few Volkswagen employees have access. In its "ghost run," or test operation, orange-colored robots run by highly complex programs and aided by humans and machines assembled eight electric model-ID.3 cars per day for testing purposes. Serial production is now set to begin on Nov. 4. Depending on how you see it, this marks either the beginning or the end of an era.

In the future, 1,500 electric Volkswagen cars are to roll off the assembly line at the plant in the eastern state of Saxony every day, a total of 330,000 vehicles every year, in what the company describes as the "largest and most efficient electric car factory in Europe." The designers of the new compact, C-class ID.3 want to make it a 21st century icon, just as the VW Beetle and VW Golf were in their heydays. That's advertising language, of course, but even from a neutral perspective, it is difficult to overestimate the significance of what is happening: In Zwickau, Volkswagen is ringing the death knell for the combustion engine. By 2040, VW plans to cease manufacturing all cars that run on gasoline or diesel fuel. It's the end of an era.

And what a momentous era it was. It lasted over 100 years, and was shaped in decisive ways by German inventors and engineers -- courageous entrepreneurs, visionary designers and highly competent, skilled workers. During this era, German automobiles became the epitome of the highest quality workmanship around the world. A time when Volkswagen, Mercedes-Benz, BMW, Porsche and Audi, and the objects of global prestige they produced, became ambassadors for Germany. Their finely tuned engines were models for industrial excellence. German cars were considered "das Auto" par excellence and Audi's advertising slogan "Vorsprung durch Technik" (Progress through technology) became one of the few German terms actually known in English.

Men like Eberhard von Kuenheim, who laid the foundations for BMW's success, Ferdinand Piëch, who first made Audi and then VW household names around the world, or Wendelin Wiedeking, who saved Porsche and catapulted it into unimagined dimensions, were to the German economy what Bill Gates, Steve Jobs and Jeff Bezos are today to American industry: heroes.

Of course, there have also always been headaches over the years: oil crises, gasoline-price shocks, trouble with air pollution in the cities, the nuisance of traffic jams and debates about appropriate speed limits. In the 1980s, people began thinking more about the links between the economy and the environment. In the 1990s, the whole world laughed when the environmentalist Green Party in Germany argued for a massive hike in the price of gasoline for the sake of the environment.

Since the start of the new millennium, worries about climate change have increased sharply, and people have started coming around to the idea that it's madness to get around using large, heavy boxes that burn fossil fuels.

Late To The Game

But it was only very recently that the German automobile industry finally came to the realization that it is going to need to radically adapt. The industry, led by Volkswagen, believed it could solve its problem in two ways: first by creating better, less-polluting and more efficient (diesel) cars and secondly, when the first approach failed, by cheating or denying reality.

As paradoxical as it may sound, VW's diesel scandal ultimately triggered the modernization push the entire industry needed. Confidence in the industry had been shaken so badly that management and supervisory boards at German car companies were forced to recognize the inevitability of radical change.

But they didn't reach that realization until very late. Now, companies that were industry leaders in the last century face the real risk of straggling behind in the new era, a development that would have serious consequences for the German economy and the country's future prosperity. It would be the beginning of a new and uncomfortable era. Because as German companies were busy manipulating their diesel engines and placing their bets on ever bigger SUVs, as they half-heartedly studied and tested alternative drive systems, and as they collected arguments against self-driving cars instead of testing them, a whole new paradigm was unfolding elsewhere in the world. In California and China, private and state-owned companies emerged that are now surpassing Germany's former technological leaders. They have entirely different views of the car and how it is used.

Until recently, the prevailing mentality among German manufacturers was that the primary use for new computer technology and digital networks was perfecting conventional cars that already exist. They didn't question their traditional business model focused on selling cars for private transportation. Meanwhile, their upstart competitors from China and the U.S. took a different approach by placing digital elements at the center of their new mobility concepts. For those companies, computers are no longer just an ingredient -- they're the very heart of the vehicles and their business model.

In the eyes of its creators, a Tesla is a high-performance computer that can do any number of amazing things, including drive itself. China's industrial pioneers are no longer exclusively interested in people's individual driving pleasure -- they are also searching for powerful new mobility tools that can be integrated into an urban life that needs to be newly organized, and that can safely and comfortably carry passengers from point A to point B.

Worlds Colliding

In recent weeks, DER SPIEGEL has been exploring the colliding worlds of the automotive industry -- at the Tesla factory in Fremont, California; in a Chinese model city located south of Beijing; at companies in southern Germany that make car supplies, and in the research departments of German automakers.

The findings are alarming. All signs point to "disruption," a word that has become fashionable these days, even among managers.

Sajjad Khan, 45, speaks with missionary zeal when he talks about the future. The Pakistani-born executive is a member of the divisional board for CASE at Mercedes-Benz, which stands for connected, autonomous, shared, electric -- i.e., everything car-industry managers believe will shape the mobility of tomorrow. It's Khan's job to ensure Daimler isn't steamrolled by the future.

He works in Sindelfingen near Stuttgart, where Daimler cars -- including the S-Class, the pride of all Daimler engineers and an icon for Mercedes fans -- have been built since 1915. More than 25,000 people work for Daimler here, in the company's largest plant. Khan aims to drive executives at workers in Sindelfingen out of complacency mode.

'We Need a Wake-Up Call'

He's just come from a company "town-hall meeting," where executives introduce strategies and changes to workers. "We need a wake-up call," says Khan. "We have to change fundamentally -- as individuals, as departments, as a company, as a country. If we don't, we're going to be facing tough times ahead." He's fighting for Germany, where his wife and children were born. Khan says his role model is Konrad Adenauer, the country's first postwar chancellor. "We need to rebuild the mentality that made the economic miracle (in postwar Germany) possible. And we can't wait until we have fallen on our faces to do this."

Khan also addresses fears that upstart competitors from Silicon Valley and China are faster and hungrier for success than Daimler. The company has given itself a new, albeit slightly desperate slogan: "We invented the automobile. Now we're shaping its future." But what's that supposed to mean?

The quick answer is anything and everything. A few weeks ago, Daimler CEO Ola Källenius conjured the company's pioneering spirit at the International Motor Show (IAA) in Frankfurt. He presented seemingly everything produced by the company's research laboratories in Sindelfingen, California and India, from an air taxi called the Volocopter to a fuel-cell vehicle. "We have to work on all four CASE themes in parallel," says Khan. "It would be extremely dangerous and short-sighted if we focused only on e-mobility."

Khan argues that the future will be decided not only by engines, but also by intelligent systems, and the ability to build and network self-driving cars, as well as the development of profitable car-sharing services. Last year, Daimler increased its research and development budget to 9.1 billion euros ($10.2 billion). But whereas Sindelfingen and Stuttgart are still in the research phase, companies in California and China have long since been building completely new, very different cars. Are the Germans putting all that money in the right places?

Daimler is putting considerable efforts into improving its "Hey Mercedes" voice assistant, which customers can use to control the infotainment system. Commercials are currently running worldwide advertising the gadget. Together with South Korea's Hyundai and two Chinese technology companies, Daimler has invested $100 million in the American startup company SoundHound, which develops speech-recognition software. Daimler fears that Amazon's Alexa or Google Assistant might one day spread beyond peoples' homes and find their way into cars. Khan wants to make sure people to use "Hey Mercedes" when they order a pizza on the go and not other companies' services. That doesn't really sound like the dawn of a new era -- at least not at first.

The Global Leader

At the future lab of Google's parent company Alphabet, John Krafcik and a team of several hundred people are focusing their efforts on the self-driving car. There's nothing in the lobby of the three-story, bright brick building in Mountain View, California, to suggest the company is single-handedly taking on car companies around the world. A large silver "X" hangs on a black wall behind the narrow reception table -- it's the code used for all the projects Alphabet is pursuing in the hopes of changing the world.

One of these projects has resulted in the creation of a separate company now known as the world leader in autonomous driving -- Waymo, a neologism combining the words "way" and "mobility." The company is developing "the world's most experienced driver." From Krafcik's perspective, that will no longer be a human being, but a computer that constantly scans its surroundings with cameras, laser scanners and radar, and runs that data through algorithms to decide how to react.

Driverless white vans cruise outside on the streets around the Google building. The vehicles still have safety drivers behind their steering wheels, but these employees don't have to steer, brake or shift gears -- they're just here to intervene in case the computer makes a mistake. That only rarely happens. On average, a driver only has to take over in the Waymo system about once every 11,154 miles (18,000 km), according to a report from the California Department of Motor Vehicles. The figures for German manufacturers, who started testing much later, are rather shocking by comparison.

Statistics show that in 2018, Waymo operated 111 self-driving test cars. General Motors even has a robotic fleet of 162 cars on the road. BMW, on the other hand, is taking part in the large-scale field test in California with just five vehicles, and Mercedes-Benz with only four. The DMV's "Disengagement Report" reveals how often the human driver had to intervene and take over from the autonomous driving system. Whereas the drivers of Waymo cars had to take over once every 11,154 miles, the five BMW test cars, which only traveled around 41 miles on the road, didn't manage 4.6 miles without the intervention of safety drivers. Mercedes fared even worse: Its vehicles only made it 1.5 miles before the driver had to take over from autopilot. The technological leap Waymo has made is already enormous -- and BMW and Mercedes have an incredible amount of catching up to do.

The Real Threat

The only good news for the latter is that the Google subsidiary has no plans to build its own vehicles. Fiat Chrysler, an American manufacturer, built the white vans in Mountain View. Waymo then equipped the vehicles with sensors and artificial intelligence developed internally at the company. But that doesn't make it any less of a threat to Volkswagen, Daimler and others in Germany.

If companies like Waymo, with their algorithms and their mastery of cameras, laser scanners and other sensors, dominate the future of automotive navigation, it could turn today's large manufacturers into mere suppliers of bodies and chassis. But what value is a robot-driven BMW if it doesn't provide "driving pleasure"? And what remains of the Mercedes myth when its heart, the engine, has been replaced by an electric powertrain and battery from South Korea, and fleets of autonomous cars are driving under the flag of the American technology giants? At the end of the day, people don't fly with a brand like Airbus or Boeing, they do so with an airline like Lufthansa or Emirates.

As is so often the case with Silicon Valley technology companies, Waymo's business model is geared toward scaling and market domination. The company currently operates its own car-service fleets and has tested its self-driving cars in 25 U.S. cities. Things have progressed so far that, in Phoenix, Waymo cars will soon start picking up their customers without a human safety driver.

Despite his drive for dominance, Krafcik has no interest in squeezing out the old car manufacturers. The company has invested 10 years in research work and billions of dollars in this technology. But all the efforts that have gone into Waymo will only pay off if the existing car industry licenses the robot-taxi system and deploys it in vehicles.

It's no coincidence that the Waymo CEO gave the opening keynote speech at IAA in Frankfurt and is currently on a global tour to promote the company. He says his company wants to support the car industry, not disrupt it.

But he does say that the current business model of primarily selling cars is inefficient. "It doesn't really work well for the world and the environment," Krafcik told DER SPIEGEL, "and it doesn't work well for the automakers."

Most cars, he points out, just sit around idle for most of the time. He says the average American car owner may drive around 25,000 kilometers each year. With an autonomous taxi or driving service fleet, on the other hand, the use of vehicles can be increased four to fivefold. Fewer cars would be required under that scenario, but they would have to be replaced more often.

Krafcik says companies could be making money not only from the sale of vehicles, but also from every single mile the customer travels. The Waymo CEO says that as providers of mobility services, automakers would have "a much greater opportunity to realize their profits."

A Dangerous Dilemma

That will be even more true once human drivers, the greatest cost factor in an autonomous vehicle, are completely eliminated. Taxis without drivers, maintenance trips without staff, deliveries without deliverers -- in this new world, there will be no salaries or benefits to pay and the machines only go on strike when they have technical problems.

It remains unclear when driverless cars will actually be able to prevail in normal road-traffic conditions -- some predict 2025, others 2050. However, few doubt that autonomous vehicles will gradually take over our highways and inner cities. The closer we get to this future vision, the more the pressure mounts for companies like VW, BMW and Daimler to partner with high-tech providers like Waymo, given that it hardly seems realistic for them to quickly develop the necessary innovations completely on their own.

This presents them with a dangerous dilemma. Without partnerships, it may no longer be possible for German automakers to play a leading role in the world of networked cars. But if they do allow the tech specialists in, they also run the risk of becoming reliant on them to the point that they take on a subordinate role and are no longer the manufacturer, but the supplier.

Some German automakers have already discussed the idea of buying shares in Waymo to secure access to the technology and have a say in the company's future. But those efforts failed due to the prohibitive cost of buying into the company. With its bright prospects, U.S. analysts have valued Waymo at up to $250 billion. That's more valuable than Daimler, Volkswagen and BMW combined.

Is this really the "iPhone moment" for German automakers, as American and British business newspapers have written, with no small dose of schadenfreude -- a turning point dividing the before and the after? Thus far, no vehicle has emerged that is comparable to Steve Jobs' iPhone, which bundled the best available technologies with a beautiful, desirable design. There isn't even agreement on the drive system of the future. So, the search continues for the time being, even if Tesla, the U.S. giant, believes it has already found the Holy Grail.

Elon's Dream Factory

Elon Musk's dream factory is located in Fremont, California. There, the Tesla CEO has an army led by comic-book heroes slaving away on his behalf on an area the size of the Vatican: Robots with names like Iceman, Thunderbird or Cyclops balance car bodies in the air, install electric batteries and carefully lift around 1,000 finished vehicles off the assembly line every day. Production of the new mass-market Model 3 alone has increased more than eight-fold since the beginning of 2018 thanks to the assembly robots.

The bright red machines are shaped like strong arms but are about twice the size of a human being when stretched out. Their movement, strength and precision are far superior to those of any human employee. Musk has named the biggest of them after characters from the science fiction series "X-Men," and their names are emblazoned on the plexiglas cages in which the robots operate.

If you want to visit the plant in Fremont, it helps to be a Tesla owner. Journalists are allowed to visit in exceptional cases, but they are subject to many conditions -- and neither photos nor note-taking are permitted. The hour-long tour is conducted with an electric tram that takes visitors through the plant, which has 5.3 million square feet of manufacturing space.

The company's self-proclaimed mission is emblazoned in silver letters at the entrance, as unwieldy as it is mighty: "Accelerate the world's transition to sustainable energy." Every employee who passes through the barriers and security has to go by the sign each day. With Tesla, which was founded in 2003, Musk has created not only a car and technology company, but also a brand with a cult-like following. The company gives its customers and employees the feeling they are a part of a greater cause, and that they are directly involved in the effort to save the planet.

Those who are unprepared to go along with it may find themselves having to get out of the way. Musk's declared goal is to eliminate all diesel and gasoline engines -- and, implicitly, all the automakers who fail to recognize the signs of the times. Musk recently tweeted his prediction that the combustion engine is a "passing fad" and will soon wind up just where the steam engine did: in the museum.

Bold Moves as Germany Straggled

Tesla has set up a few old gasoline pumps at its Fremont factory, with a supercharger electric rapid-charging station next to them. There's no question, of course, about which devices come from the past and to which the future belongs. Tesla has already installed 14,000 superchargers around the world. It's a bold move, if you consider that politicians and executives at car companies in Germany are still debating whether electric cars are the right step and, if so, who is responsible for financing and managing the necessary charging stations. Tesla has built up the necessary infrastructure on its own.

It's the Musk way: Many thought he was crazy when he bought the gigantic Fremont factory from Toyota. And executives in Germany at VW, BMW, Daimler and Audi all found it amusing when he announced he planned to create a new automaker. Nobody is laughing now.

The bright lighting inside the Tesla factory makes it feel like a sterile hospital ward. The employees look like toys working among the white steel scaffolding. They wear black trousers and black shirts as if they're already mourning their own coming obsolescence. Musk's dream, after all, is to have a highly automated factory: "Building the machine that builds the machine." For now, though, he still needs people, and around 9,000 are employed at the Fremont factory, where they maintain and program the nearly 1,100 robots used to assemble the Model 3.

Tesla Is Years Ahead

For a long time -- too long -- the established car companies viewed Musk as a pompous man burning through loads of cash with his billion-dollar investments in charging stations, and car and battery factories. But they were wrong. Tesla often posts losses, but last month, Musk reported a surprising profit for the last quarter. The company's cash reserves fluctuate, it occasionally operates on the verge of financial collapse, and Musk has had big problems with the kind of mass production that VW and Daimler can handle confidently, but the quality product Tesla delivered shocked everyone.

Companies like VW got a hold of Tesla's new mid-range Model 3 before it reached the market and dismantled it into its individual parts. Their findings were shocking: They discovered their small American rival was years ahead of them in important areas. In addition to having more efficient batteries, Tesla's cars also have better network connections. It turns out the Musk's aspiration to turn cars into rolling computers was more than just talk.

Indeed, Tesla's engineers have a different approach to their product. They believe cars can be improved through constant updates, just like a smartphone, and developed what they call the over-the-air update, which allows for car maintenance to be provided without having to take it to a dealer. They are able, for example, to shorten cars' braking distance by realigning the algorithm for the anti-lock braking system using an internet update. Model 3 owners can also unlock pre-installed seat-heaters in the back seats. It's a fascinating new experience that is particularly fun for early adopters, even if not every new innovation works flawlessly from the start.

Tapping Computer Power

An insider claims the Teslas are equipped with central computers that are about as powerful as 150 PCs combined. Entire teams within Musk's company are devoted to the question of what a car with that kind of computing power can do.

They came up with ideas like the "Smart Summon" feature, which allows car owners to "summon" their car -- that is, to prompt it to unpark and drive to them autonomously -- although there were a number of problems with the function first got released. And "Sentry Mode," a surveillance mode in which the car films the surrounding area and triggers an alarm as soon as any suspicious person gets too close. Tesla drivers have uploaded videos filmed in Sentry Mode to YouTube showing people secretly scratching cars or trying to steal them.

Although Tesla's future remains uncertain, Musk has managed to shake up the entire industry. His company now delivers close to 100,000 electric vehicles per quarter, more than VW or Mercedes managed in the past year. That's another reason other companies are trying to maintain ties with their competitor in California. Daimler temporarily became a strategic investor in Tesla, and VW head Herbert Diess later flirted with the idea of buying shares.

But the Germans have since shifted their strategy and now want to fight Tesla rather than embrace it. Whether that's a good idea is an open question.

'We View the Car as a Whole'

On the A92 autobahn north of Munich, Falk Schubert takes his hands off the wheel of a silver BMW 7-Series car. The car accelerates, then changes into the fast lane and back into the middle lane as if controlled by a ghost hand. It gets dangerously close to a semi-truck in the right lane, but Schubert stays calm.

The engineer works at the BMW Group Autonomous Driving Campus set up by the company in Unterschleissheim outside of Munich. Around 1,500 people work for the operation, programming and testing in their effort to take on competitors like Waymo and Tesla. But whereas the Americans are concerned with developing the perfect operating system and, by doing so, setting the standard for fully autonomous driving, BMW and Daimler are doing things the German way. "We always view the car as a whole and develop it together with all its functions as a unit," says Schubert. "We don't want to build moving shells for the software." Step by step, developers are expanding automated functions that already exist.

In 2021, BMW plans to equip its iNext electric car with a feature for autonomous driving on motorways that would correspond to Level 3, "conditional automated driving," on the six-level scale experts have created for the path to fully autonomous driving. The "0" stands for no automation of the vehicle, meaning the person at the wheel has to see and regulate everything. The "5" stands for full automation -- anyone in the car is a passenger and there doesn't even need to be a steering wheel. So far, globally, the level most seen so far has been 2, or "partial automation."

The possibility that Waymo might one day become the only provider of software for autonomous vehicles and the manufacturers would deliver just the hardware is a danger BMW recognizes as well. But the company is confident that such a scenario will not become reality. After all, the tech companies will be reliant on the producers as partners.

That, though, sounds more like hope than a strategy. What is clear is that the traditional automobile manufacturers are not in a position to produce the necessary innovation on their own. The development of autonomous driving systems takes vast sums of money, with the costs having already climbed into the billions at BMW alone. To share the burden, the Munich-based company signed a cooperation agreement with its arch-competitor Daimler in July.

Cooperation between the two companies has been far from smooth, as a different collaboration has shown. In February, BMW and Daimler merged their two carsharing brands Car2Go and Drive Now into a new joint venture called Now, but in September, the head of Now quit, apparently because the two parent companies were unwilling to invest more money in the mobility service.

The basic idea behind the company, that of maintaining a fleet of cars in large cities that customers can cheaply and quickly use with the help of a mobile phone app, remains a good one. But the costs are too high, particularly for the personnel needed to maintain, clean and fuel up the vehicles, and Daimler and BMW are still losing money on the project. Indeed, if financial investors don't provide fresh liquidity, or if VW isn't brought on board to create a larger alliance, the experiment could soon be over. And the Germans would no longer be a player in the carsharing market.

From Beijing, almost a dozen highways and turnpikes head south, and another is currently under construction, an eight-lane swath stretching for 100 kilometers, with two of the lanes reserved exclusively for autonomous vehicles. The road will link Beijing with Xiongan, a model city that is to ultimately be home to a few million residents and will alleviate some of the density pressure plaguing the traffic-choked capital.

A Glimpse of the Future in China

So far, only the very center of the "Xiongan New Area," as it is called, has been completed, with a service center, an administrative building, a hotel, two office complexes and the local Communist Party headquarters. But even just this downtown area provides a glimpse at what the future of mobility will look like in China and the vast dimensions the country is planning for. Xiongan is going to be a quiet city, with only electric cars allowed. Thus far, two large parking lots have been completed, each spot equipped with a charging station. Plagued by chronic air pollution, China is focusing its efforts on e-mobility.

Companies like BYD and CATL are among the largest battery producers internationally and their planned capacity is three times higher than the combined potential of all other producers in the world. In Beijing alone, there are already 130,000 charging stations for electric automobiles, more than in all of Germany. China's government is also open to other propulsion systems, including hybrid motors and so-called fuel cells. But it has become clear that the internal combustion engine no longer has a future in the largest automobile market in the world.

Electric car owners in China receive generous state subsidies. They aren't as high as they used to be, when public coffers in some cities would pick up almost a third of the purchase price, but the assistance is still significant. Purchasers of electric cars aren't required to pay the astronomical fees for license plates, as owners of internal-combustion vehicles do, and they are allowed to drive on all days. Cars with conventional motors, by contrast, must remain parked on one day of the week in large cities. The new city of Xiongan, meanwhile, will be a metropolis without drivers. Already, the ring road around the city center is plied by small, blue, driverless buses. There is still a tablet-wielding conductor on each bus to ensure that they don't collide with one of the yellow boxes making their autonomous rounds. Those boxy vehicles are mobile vending machines selling drinks and snacks, and they automatically stop when their sensors detect a potential customer, who pays by mobile phone, of course.

The autonomous buses and vending machines -- along with Xiongan's autonomous streetcleaners -- all run on software developed by the search engine provider Baidu. The internet behemoth was the first to specialize in driverless mobility and has since been joined by the online retailer Alibaba and the social media company Tencent. Together, they have invested billions in the sector -- in the transportation company DiDi, for example, and electric automobile startups like Nio and Byton. They have also hired software engineers to write the programs for autonomous vehicles. Meanwhile, to make sure the requisite data flows unhindered, Huawei is rapidly developing a 5G network.

Fan Bonan, 23, leads visitors through the model city of Xiongan on behalf of the government. She lives a few kilometers outside of city limits and drives a white VW Golf. On the way to work every morning, she has to park her car in a lot far outside the Xiongan New Area, where a fleet of electric buses is waiting to bring her and hundreds of other commuters into the city center. China has almost a complete monopoly on the production of electric buses, with practically all of the 400,000 of them in use worldwide having been built in the country.

When asked what her next car will be, Fan Bonan responds: "I'm not planning to buy another car. If you move to Xiongan, you don't need one. The city is being built so that every resident will live in a '15-minute life circle,' including a supermarket, a community center, a polyclinic, a cinema and a school, all of which can be reached on foot within 15 minutes." And if your job is more than 15 minutes away, an autonomous bus will take you there.

An Early Lead that Disappeared

In winter 2017, BMW bathed its 22-floor headquarters in colorful light. Spotlights illuminated the lower floors in a rich blue, with white plus-symbols projected on the upper floors. The famous high rise of the Bavarian Motor Works, also known as the "four cylinder," was transformed for an evening into a bundle of batteries, garnished with the slogan: "The Future Is Electric."

With the light installation, BMW was celebrating the milestone of 100,000 electric and hybrid vehicles sold worldwide. When measured against the 2.5 million vehicles the Bavarian company sells each year, it's not a huge number, but in the poorly developed electric vehicle market in Germany, it was sufficiently high to be market leader. "I measure our success on electric mobility," said then-BMW CEO Harald Krüger. But not even two years later, the company's sense of self-confidence has almost completely disappeared.

Sales numbers for electric cars remain far behind original expectations and Krüger himself has left the company. His successor, Oliver Zipse, has drawn a rather hesitant conclusion from the e-mobility experiment thus far: "It takes a long time to collect the necessary technological experience," the new BMW head says. "Our competitors will also need this time."

Zipse has essentially abandoned the ambition of turning BMW into a mobility service provider. The company has once again limited itself to its previous role of producing quality automobiles.

Like all other automobile producers, BMW faces significant pressure to keep costs down, and profits in the first half of 2019 are down by half relative to the same time period in 2018. Meanwhile, expenditures on research and development have recently been climbing by around a billion euros each year, in part to fulfill the increasingly strict emissions regulations.

In regions like Russia, Africa and South America, electric vehicles are far from securing much in the way of market share, the BMW leadership believes. As such, Ziske believes that the debate about electric mobility is infused with "a lot of industrial populism." The most important factor, he says, is often ignored: "The customer alone decides what car with which propulsion system he wants to drive." The BMW boss is in favor of a mix of a variety of different propulsion systems, in which battery-powered vehicles is just one of several different options, along with hydrogen cars with fuel cells, for example.

Zipse calls it "The Power of Choice." And while it may sound sensible, it doesn't exactly exude determination. Indeed, the fact that BMW is shying away from focusing most of its energies on a single technology, namely battery powered electric cars, almost sounds like a capitulation. After all, BMW was once a leader in the field.

In 2013, BMW became the first German company to introduce an electric automobile that seemed suitable for the mass market. The small i3 was envisioned as a sales hit in Europe and in the smoggy metropolises in China and the U.S. Financially, though, the prestige model was a disaster, in part because of the expensive materials that BMW used in the construction of the i3 and the high costs associated with the battery and carbon-fiber body. Furthermore, BMW overestimated how many vehicles it would sell. In the first year, only 16,000 of them were sold, with the company planning to sell 40,000 in 2019. The i3 is no longer in the global top-10 list of electric vehicle sales.

Once a Trailblazer, Now a Straggler

At BMW headquarters, the i3's struggles have been explained away with the argument that the introduction of the electric vehicle simply came too soon. But that's only partially true. Shortly after the introduction of the i3, company management got nervous. Instead of introducing additional electric models, BMW decided to put electric vehicle development on hold. And the early lead the company had fought for quickly disappeared.

BMW is now planning to introduce the next generation of electric vehicles in 2021, with most of its competitors set to hit the market much earlier than that. The trailblazer is now in danger of becoming a straggler, and a number of electric-mobility innovators have since left the company. Ulrich Kranz, formerly the head of BMW electric push, is now developing electric vehicles for the American startup Canoo. Carsten Breitfeld, who was responsible for the development of the hybrid i8, is now head of the American-Chinese electric vehicle producer Faraday Future. Christian Senger, former head of electric-mobility product development for BMW, is now a Volkswagen executive.

And there is much to suggest that BMW isn't planning to abandon its hesitant course any time soon, despite its planned introduction of new electric vehicle models. CEO Zipse isn't a fan of taking incalculable risks, neither with the production of electric vehicles nor when it comes to mobility and car-sharing services. BMW's core competency, he says, is "building the best cars in the world." That, he continues, "is the real challenge facing our industry."

Another rather mundane truth facing the BMW boss is that there is simply a lack of money for large-scale technological experimentation, because profits simply cannot be allowed to fall any further. Already, BMW management is negotiating with the works council over possible spending cuts, with bonuses likely to shrink and some shifts to shorten as well. BMW also plans to limit is menu of models, with the future of the i3 likewise uncertain.

It is now others who harbor the grand ambitions.

A Chinese Push In Europe

Li Shufu, known as a phantom to some, made an appearance exactly to his liking a few weeks ago. He went to the international automobile convention IAA, but he remained largely invisible. Aside from a few hand-picked executives, nobody saw him. Yet Li is the founder and CEO of Geely, the largest private automobile company in China, and he has become one of the most influential actors in the international automotive industry. Li is considered something of a control freak and is said to be a micromanager who keeps close watch on all parts of his company.

In Germany, many are reminded of the late VW godfather Ferdinand Piëch, and Li Shufu is doubtlessly just as ambitious. He wants to make Geely a global leader in electric mobility and to become a direct competitor to VW. And the German company's strategy of producing cars under a number of different brands is an example Li is interested in emulating.

In Europe, Geely took its first huge step toward increasing its product offerings in 2010 when it took over Volvo. The move immediately transformed Geely into a major player, given that the company had exclusively produced compacts until then. Since then, Geely has been aggressively pushing the electrification of the Scandinavian brand. Geely also purchased the London Taxi Company, which makes the legendary Black Cabs. That purchase was made in 2013, and since then, the Chinese company has built a new 275-million-pound factory where it is building electric Black Cabs, hoping to turn them into an export hit. Ioki, the shuttle service operated by the German rail company Deutsche Bahn, has deployed some of the first vehicles.

In Germany, the Chinese are coming in through the backdoor, but their goals are no less ambitious. When Li Shufu first approached then-Daimler CEO Dieter Zetsche in fall 2017 about buying a stake, he was met with more suspicion than interest. But just a few months later, Li bought around 10 percent of the company for some 7 billion euros, essentially taking the German carmaker by surprise.

A Partnership and Bridgehead into Europe

By now, under new Daimler CEO Ola Källenius, top executives in Stuttgart have grown closer to their Chinese investor. That became apparent in March when Daimler opted to pair its crisis-ridden subcompact Smart in a joint venture with Geely. The new partner is building a factory in China which will begin producing completely electric Smarts in 2022. "We can rely on cost structures there that wouldn't be possible for us here," says Källenius, "which allows us to achieve adequate profits." Thus far, Smart has only produced losses. Daimler and Geely are operating an additional joint venture in China as well, a ride-hailing service that is conceived as a kind of upscale Uber.

Li Shufu is convinced that the greatest assault on the established automakers -- and he sees his own company as part of that attack -- will come from outside the industry, from companies like Alibaba, Google and others. The competitors of yesterday must become allies if they want to repel that onslaught. That's why he sought out the partnership with Daimler, and that is why he has established a bridgehead in Germany, in the town of Raunheim, just south of Frankfurt.

Geely has an office and research building just nine minutes by car from the Frankfurt airport. It is big enough for 300 employees, but thus far, only 40 have moved in. The company is luring engineers, designers and other experts away from companies like Ferrari, Maserati, GM and Fiat in addition to targeting employees at German suppliers and premium manufacturers. Their task will be that of developing chassis and safety components for electric cars that can be used in all the vehicles produced by Geely. Networking is also a focus of the research. Geely opted to set up the office near Frankfurt because China still has a great deal of respect for German engineering and they are eager to learn.

Such sentiments are music to German ears, but the question is for how long such humility on the part of the Chinese will continue. Geely is systematically expanding its market share, also in China. The government under the leadership of Chinese President Xi Jinping is eager to create global champions, and Geely is one of them. The private company could ultimately become a model for state-owned manufacturers.

Initially, the Chinese government allowed hundreds of companies to compete against each other as a way of accelerating the electric-mobility offensive. Thanks to gigantic state investment in the expansion of charging-station infrastructure, that offensive proved successful, with domestic producers completely dominating the market, even if some of the well-known startups may not survive on the long term. On the list of the top-10 bestselling electric cars in China, not a single German producer can be found. VW, Daimler and BMW are only still leading when it comes to internal combustion engines.

Are German Giants at Risk of Downgrade?

Günther Oettinger, the European commissioner for budget and human resources, isn't squeamish when it comes to defending the German automobile industry. A member of Chancellor Merkel's Christian Democratic Union (CDU), he even once accused the mayor of Tübingen, a member of the Green Party, of high treason when he chose a hybrid Toyota as his official car instead of a Daimler. Oettinger is concerned about the future, believing that Europe and its car industry could ultimately become dependent on IT companies in America and Asia. When it comes to classic parts, such as shock absorbers, fenders, seats and lighting technology, German companies are still the best, he says, but not when it comes to collecting and analyzing vast amounts of data. "Car manufacturers like Mercedes, Audi or BMW could be downgraded to suppliers for data companies like Google or mobility service providers like Uber," Oettinger fears. "The great danger is that the car companies lose control of the data and with it, the link to customers. Those with no data are powerless."

At the same time, Oettinger believes it is misguided to focus all efforts on electric mobility. The companies reacted to political pressure with their e-offensives, but policymakers, Oettinger believes, weren't precise enough with the incentives they offered. EU regulations, he argues, allow producers to sugarcoat their CO2 balances: They are allowed to calculate 0-grams of CO2 emissions from their electric vehicles, even though the production of those vehicles alone produces several tons of the greenhouse gas. "It's not always accurate to view electric vehicles as climate-neutral," says Oettinger. "It also depends on how the electricity is generated, whether it comes from renewable sources or not."

Even if customers begin buying more electric automobiles in the future, there is no guarantee that they will be German models. A car reviewer from the French daily Le Monde expressed astonishment in May at the purchase prices of 82,600 euros for an Audi e-tron and 78,950 euros for the Mercedes EQC. They are certainly attractive, comfortable cars with a 400-kilometer range and 300-kilowatt output, he wrote, but the steering is "less technically mature" than in comparable Tesla models. More than anything, though, he wrote, the two models are lacking a dose of boldness: "They feel like electrified conventional vehicles and not like a new generation of cars."

Germans have always had a difficult time with revolutions, whether technological or political. Which accounts for the fact that the end of the internal combustion engine still hasn't been completely accepted as a foregone conclusion in the country. The industry continues to build heavy SUVs with gas and diesel motors as if the climate debate didn't exist. Whereas 35 million sports SUVs plied the roads of the world in 2010, that number today has risen to 200 million. With that development, according to a report from the International Energy Agency, the automobile industry has cancelled out all technical advances that have been made in that timeframe.

The engine -- the pride of the German automobile manufacturers and the most valuable part of the cars they produce -- is being eradicated before their very eyes. It hurts, and it also has serious consequences well beyond the future of major brands like Daimler and Audi: If you've ever seen a completely disassembled internal combustion engine, with its 1,200 to 1,400 parts, you can imagine just how vast and established the supplier industry must be. Behind each belt and intake pipe, each piston and cast part, each gasket and camshaft, is an entire company that produces and delivers one of those parts in the best quality and to the utmost precision. But it's not the same with electric motors.

Electric motors have maybe 100, maximum 200 parts. In electric mobility, the battery is the most valuable part and accounts for around a third of the value added. And the batteries will not be coming from Germany, but from Samsung and LG Chem in South Korea or from CATL in China. The race to establish at least one European battery producer seems to have already been lost.

Hundreds of Thousands of Jobs at Risk

What will that mean for a Germany that is justifiably proud of all the mid-sized companies that produce high-tech parts from their locations in myriad small towns and villages in the Germany countryside? What will it mean for the automobile industry, the most important branch of German industry, on which 88,000 jobs are directly dependent and which supports an additional 900,000 jobs indirectly? It is far from alarmist to say that hundreds of thousands of jobs are in danger.

Hardly anyone is doing as much to ward off that fate as VW CEO Diess. In the coming years, the company is planning to invest 30 billion euros in a "systemic change" aimed at transforming the company, more recently known for its dirty diesel tricks, into a global market leader in e-mobility. VW plans to produce 22 million electric cars in the next 10 years, more than any other automaker. It is an expensive experiment and it is unclear what will be the result.

Nobody knows, after all, how electric car sales will develop. They still don't exactly fly off the shelves and their global market share is somewhere between 2 and 3 percent, even lower than that in Germany. The German government won't even come close to achieving its formerly announced goal of having a million electric cars on German roads by 2020. Still, none of that means much. After all, the new era is only just beginning. The VW CEO is depending on policymakers to heavily subsidize the shift, saying "it is a societal concern." And the draft proposal from Germany's "Climate Cabinet" envisions higher subsidies for electric cars than has thus far been the case. An automobile summit is planned for Nov. 4 in the Chancellery in Berlin, a gathering that will focus on the question of how the government and the industry can help the e-mobility industry to finally break through. Because all incentives thus far have proven to be ineffective. Indeed, the government together with the automobile industry earmarked 1.2 billion euros for purchase incentives for those willing to buy an electric vehicle, but by 2019, only a third of that sum had been collected by customers. But even if Diess wins his bet and customers buy the electric vehicles his company is planning to build, the automobile country of Germany is facing hard times.

'Many SMEs Won't Survive the Transformation'

At the headquarters of ElringKlinger in the southwest German town of Dettingen, cylinder-head gaskets are produced for almost all large carmakers. The product is reminiscent of a stencil for drawing circles, and to produce them, a gigantic machine punches holes in a metal band, through which the head of a cylinder can later fit. The sensitive parts must be able to withstand violent shaking and extreme temperatures. After all, they seal off the engine's combustion chamber.

But nothing is burned in an electric motor. And for ElringKlinger, world leader in cylinder-head gaskets, that's a problem. Around 90 percent of its annual sales of 1.7 billion euros depends on gas and diesel engines. If VW, Daimler, BMW and all the others were to replace a significate portion of their current fleets with electric vehicles, the Dettingen-based company would face a shortage of orders.

"The pressure on suppliers from producers has increased massively in recent years and they are behaving in a short-sighted manner," says ElringKlinger boss Stefan Wolf. As head of the employers' association Südwestmetall, he is something of a spokesman for all of the automotive suppliers in the region surrounding Stuttgart. Even though he has been in the business a long time, Wolf isn't necessarily a complete devotee of the internal combustion engine. Indeed, his second company car is a Tesla.

The transformation will only be successful, Wolf says, if the suppliers are given the space to be a part of it. After all, he says, the automakers heaped pressure on their suppliers for years to help perfect diesel technology. Making things even more difficult for companies like ElringKlinger is the fact that producers are trying to take over a larger part of production in order to save the jobs that would otherwise be eliminated once internal combustion engines become a thing of the past. The strategy is called "insourcing," and it is one that the most powerful works councils are insisting on.

"Many small- and mid-sized suppliers that are dependent on the internal combustion engine won't survive the transformation," Wolf says. "The train is already going extremely quickly and its is very difficult to jump onboard." Companies like Gusswerke Saarbrücken, Eisenmann and Weber Automotive filed for bankruptcy this summer, all of them mid-sized companies with up to 3,000 employees. At Continental, 20,000 jobs are at risk while at its subsidiary Schaeffler, 1,300 jobs are being cut. Bosch is cutting 1,600 jobs and Mahle is also downsizing. ElringKlinger and others are preparing to shorten shifts while at automotive supplier ZF Friedrichshafen, workers are striking out of fear that the company is planning on moving jobs and factories overseas.