And as Europe's biggest economy...

...there are some huge challenges ahead

From its increasingly complex relationship with China...

...to climate change

All eyes will be on how Germany's new leaders...

...grapple with these issues

But there's one German industry that reveals a lot...

...about the country's prospects

Its cars

Traditionally, the car industry here has been very powerful

There have been open doors to German ministries, to the chancellery

Germany's car industry is a vital part of its economy

With links to government that go back decades

How this world-renowned motor industry...

...navigates the challenges ahead could tell you more than you think...

...about Germany's future

The curves…

...the precision

It's cutting-edge engineering like this that has helped place...

...carmakers at the heart of the German economy

And the industry has proved a bellwether...

...for the country's future prospects too

Since the 70s...

...car exports have risen with Germany's wealth and influence

Manufacturing is incredibly important in Germany

It represents around 18% of GDP

And of course, the car sector represents a very large part of that

It's not quite, you know, where the car industry goes...

...Germany goes, but the sector is absolutely crucial...

...to the future of Germany and the future of its industrial model

But that industrial model could be under threat

After over half a century of global dominance...

...German carmakers are now playing catch-up

And it's not just the car industry that's losing ground

In 2000...

...seven of the world's most valuable companies were German...

...but in the past two decades, that number has fallen to just three

How Germany's carmakers attempt to claw back global market share...

...could be telling for the economy as a whole

Take international relations

Almost half of Germany's GDP comes from exports

Cars make up the biggest proportion of this

Who Germany sells cars to matters

It can point to alliances or trouble brewing

Since 2016 China has been Germany's biggest trading partner

In 1998, German trade with China was worth $16bn...

...now it's worth over $180bn

But there's a fear that Germany...

...could have become too reliant on the Chinese market

For the past 16 years, Angela Merkel has courted China...

...in the name of trade

It's an approach that has its risks

Particularly now, we're in this context of this emerging systemic competition...

...between America and China

At least for some people, there is a worry...

...that putting all of your eggs into the Chinese basket...

...might leave you exposed to some of the ill winds of...

...geopolitics and geoeconomics...

...that might be heading Germany and Europe's way in the coming years

There is a strong sense that...

...Germany's China policy is going to have to be recalibrated...

...basically on pretty much every single front

Germany's new leader will face the same challenge as its car industry

How to keep their biggest trading partner onside…

...without ending up in its pocket

China already leads Germany in one crucial aspect of manufacturing...

...digitalisation

This is not traditionally a country...

...that has been closely associated with digital innovation

It's going to be a big challenge...

...across a whole range of domains

Look at carmakers, and it's, you know traditionally...

...engineers have been at the heart of what it is that car manufacturers do...

...making components, fitting them together, making them look beautiful

The digital skillset has traditionally taken a backseat...

...and that's going to have to change

And it's not just Germany's car industry that needs to modernise

Before the pandemic, two-thirds of German businesses...

...said they still regularly used a fax machine

And only one in three German companies...

...have a central digital strategy

Just eight years ago, Angela Merkel became a meme...

...when she referred to the internet as “Neuland”...

...the German for uncharted territory

The next government is probably going to have to be...

...a lot more digitally literate...

...than the ones that Angela Merkel has led for the last 16 years

And it's going to have to do a hell of a lot more...

...to translate the rhetoric on digitalisation...

...into the reality of fostering genuine change in this country...

...which has been severely lacking for the last couple of decades

But there's an even greater challenge...

...that could define Germany's global relevance: climate change

Here, Germany's car industry is a microcosm...

...for how the country will need to radically shift

Traditional forms of power will need to be replaced

For cars, that means a race to go electric

Oliver Zipse took over as CEO of BMW in 2019

He's overseeing one of the biggest shifts in the company's history

A commitment to battery-powered cars

The whole car industry is launching a lot of electric vehicles now...

...and BMW is on the forefront of that

I think we need to speed up our efforts...

...to keep up with the electro-mobility demand

It's a big market developing

Of course, we want to increase our profitability...

...and with the right set of components, products...

...I think that can be a very solid business foundation

Climate change has forced this shift to a greener future

But it was American, not German engineering that first realised it

An electric car can be the best car in the world

Although an early investor in electric technology...

...BMW has now fallen behind rivals in the e-car market

Other German carmakers were slower still

When it comes to fostering innovation...

...the country is still in second gear

Although disruptive innovation does exist here...

...Germany's leaders could do more to nurture it

Let's see the acceleration on it

It's good

Sono Motors is a startup based in Munich

They're technically carmakers...

...but their approach is light years away from the traditional brands

What we're doing is we're producing an electric vehicle...

...that is equipped with solar cells

They're one of several developers around the world...

...trying to get a solar-powered vehicle to market

Their car, the Sion...

...can share power with the grid and other cars...

...and comes with ridesharing software built in

Their claim is that they're the only car company...

...that thinks the industry should be selling fewer cars

Their approach could upend the industry...

...and their ethos is emblematic of a new way of German thinking

We see ourselves as a mobility service provider...

...it's not only about the car...

...it's about the whole new mobility concept we're providing

Carsharing, ridesharing, power-sharing, a car itself...

...solar integration, solar technology we sell to others

This whole new approach on how we think...

...mobility should look like in the future

Small companies like Sono have the vision for a greener future

But Germany's politics may make it hard to realise

One of the challenges I think...

...that you're going to see in Germany...

...is that the next coalition...

...is probably going to be made up of three different parties...

...that may well have very different ideas about...

...how to manage the climate transition

The sort of consensus-oriented approach...

...that's deeply ingrained in Germany...

...may not look like it is particularly well suited...

...to manage this extraordinary industrial transition...

...that we're going to have to bring about in the years ahead

So that's going to mean a very, very big role...

...for the next chancellor

And as efforts to digitise continue...

...Germany's new leader should plan for a workforce in need of upskilling

We're going to have a massive ramp up...

...of jobs in the battery-manufacturing sector

We're going to have a huge demand for coders...

...digital skills and a concomitant decline...

...in the demand for engineering skills that we've seen

And as China's might grows, Germany will have to be more careful...

...about who it gets into bed with...

One of the things I think, for example, that you're going to see...

...in the next legislative period is...

...real investment in Europe's ability...

...to stand on its own two feet to ensure...

...that it is not excessively exposed to the risks...

...that could come from a stepping-up of the strategic competition...

...between America and China

Angela Merkel was careful not to scare voters...

...with talk of transformation

But that's left Germany's new leaders with a lot to do

Germany has to do better, right?

We have those very big companies, those very big players here

But they aren't the disrupter, the driver behind innovation

Disruption comes always from the new and young companies...

...which drive change

German startups rarely grow into tech giants

Without making changes...

...Germany risks losing competitiveness throughout its economy

There's a nice German word, Zukunftsfähigkeit...

...which is roughly translated as the ability to face the future

A lot of people looking at these challenges...

...are starting to wonder how Zukunftsfähig Germany really is...

...and this really is going to be a big challenge...

...not only for the next chancellor...

...but for the government that he or she is going to lead...

...because a lot of people think...

...that Germany isn't really ready...

...and that it will need to act quite quickly...

...across a whole range of domains in order to meet these challenges head on

Thanks for watching

To read The Economist's assesment of Germany's future after Angela Merkel...

...click the link

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