Macroscope | When Tesla sets up shop in Germany, it’s a sign of things going wrong with Europe

Europe’s common market is supposed be a level playing field. But as Germany remains a magnet for foreign capital – most recently Tesla’s – the gulf between Europe’s rich and poor will only widen, fuelling the EU’s existential crisis

3-MIN READ3-MIN

The town sign of Freienbrink, the industrial park of Gruenheide. Tesla plans to build its first European factory in Gruenheide in Brandenburg, near Berlin. Photo: EPA-EFE

Published: 3:00am, 19 Nov 2019Updated: 4:19am, 19 Nov 2019

When Elon Musk recently announced intentions to build a new electric car plant, Gigafactory 4, close to Berlin, it seemed like another coup for Germany and another failure for euro-zone economic policy. Certainly, it’s a snub to the euro zone’s weaker economies, which are desperate for injections of new investment capital and always eager for fresh economic impetus.

Instead, Germany remains a formidable magnet for foreign capital as Europe’s presumed most efficient producer, exacerbating tensions with its less well-off partners. European populism has not gone away and will only boil over again as economic imbalances continue to widen. Brexit is not the end of the European Union’s existential crisis and it’s no wonder the euro is struggling. The cracks are spreading in Europe.

The EU’s motto may be “united in diversity”, but it could easily end up disunited by disparity. Europe’s common market is supposed to be a level playing field ensuring equal opportunity based on cooperation, harmony and fairness, but this seems in short supply, given glaring economic discrepancies across the continent.

This is nowhere more evident than in the contrasts in European youth unemployment: a low 5.9 per cent in Germany, compared to around 30 per cent of people aged between 18 to 25 in Italy, Spain and Greece. The gulf between Europe’s rich and poor is widening and fuelling growing political rancour.

So why aren’t EU policymakers doing more to redress the imbalance and even the odds in favour Europe’s weaker economies? Brussels says it comes down to EU competition rules and corporate freedom.

Clearly, Musk is eager to tap into Germany’s expertise as the powerhouse of European car production, but a big pulling point is also Germany’s unswerving commitment to the electric car market, especially government plans to extend generous subsidies for new purchases.

.css-1m2rp1p{color:#34b8b5;}Macroscope | When Tesla sets up shop in Germany, it’s a sign of things going wrong with Europe

Macroscope | When Tesla sets up shop in Germany, it’s a sign of things going wrong with Europe