dirty secret
That’s where Germany comes into play. The dirty little secret about European R&D spending is that half of it comes from Germany. And most of that investment is going into one area: the automotive sector.
That may seem obvious given the size of the sector (Germany’s auto industry generates annual revenues of around 50 trillion euros), but it’s not the one where you’ll get the most bang for your buck (or euros). This is because technological innovations in the automobile field, such as improvements in engine fuel efficiency, are progressing step by step.
In other words, the companies are literally reinventing the wheel, rather than an entirely new product that creates an entirely new market, like the iPhone or Instagram.
At least Europe is very consistent. In 2003, the top corporate investors in research and development in the EU were Mercedes, Volkswagen and German engineering giant Siemens. In 2022, it will become Mercedes, Volkswagen, and German auto parts maker Bosch.
All in all, it worked out pretty well to put all of Europe’s eggs in one basket…but it didn’t. Europe accounts for more than 40% of global R&D spending in the automotive sector, but Germany’s vaunted automaker has somehow missed the electric vehicle boat.
This failure is at the heart of Germany’s economic slump, as evidenced by VW’s recent announcement that it would close some German factories for the first time in its history. Germany’s automotive sector, which employs around 800,000 people domestically, has been the lifeblood of the German economy for decades, contributing to the country’s growth more than any other sector.
