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The automotive deal (39)

The iron horse, pride of Europe (39)

The means of transportation available determine how society develops. Accessibility to opportunities and social connections shapes economic mobility and progress. Few symbols illustrate this better than the horse in old Europe. A horse was (and to an extent still is) a symbol of nobility, wealth, and chivalry. Owning one signified that the owner was an esteemed member of society.

As technology progressed, the horse was replaced by the automobile. This transition was nothing short of monumental, partly democratizing travel. Cars could reach farther, carry more, leave streets cleaner, and require significantly less maintenance. Society collectively embraced this shift, and in doing so, we transferred the horse’s symbolic status to the car. We even measure engine strength in horsepower, a nod to this transformation.

The rise of the automobile reshaped the world. Roads were built to accommodate them, gas stations sprang up to ensure no place was out of reach, and entire industries flourished—road construction, garages, tire manufacturing, car and engine design, and, of course, the factories themselves. These industries didn’t just produce goods; they created jobs, adding immense value to society. Recognizing this, governments eagerly supported and subsidized their automotive sectors (sometimes to the detriment of public means of transportation), fueling economic growth.

In the race to dominate the car industry, some nations pulled ahead. The U.S. and Japan successfully cultivated world-class automotive companies, but the undisputed champion was Europe—especially Germany. German engineering became the backbone of the industry, driving much of the continent’s economic growth.

However, success is not a 100-meter sprint but a marathon. Staying competitive requires continuous reinvention, and it seems that Europe’s champions rested too long on their early successes. The market was disrupted first by Tesla’s electric revolution, then by relentless Chinese manufacturers backed by subsidies, economies of scale, cheap labor and energy, and access to rare earth minerals. The competition is now too strong to ignore.

All is not lost, of course. Competition, when embraced, can lead to better services and innovation. The real question is: how can Europe reignite its innovative spark to sustain economic growth and industry leadership? Perhaps a soft pivot to defense could provide a temporary boost. Given the continent’s sudden need for weapons procurement, ramping up the production of armored vehicles might not only strengthen Europe’s security but also create economic momentum. And hopefully, by learning from these challenges, Europe can prevent an aviation industry stall before an upstart disrupts yet another cornerstone of its economy.

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