Elon Musk banned one thing at Tesla. Working like the old carmakers. Elon knew Tesla couldn't match the size of the old car giants. So his message was: Tesla has to be smarter and faster. And it must never copy the structures of the old carmakers. In a leaked email, he describes how things work at most companies: - Someone needs something from another department - So they ask their manager, who asks their manager, who asks the head of the other department - And the answer takes the same route back His verdict: "This is incredibly dumb." Silos form on their own in every growing company. Musk writes: "This is unfortunately a natural tendency and needs to be actively fought." So he gave his companies a few rules: - Everyone talks directly to the person they need, regardless of hierarchy - No abbreviations or made-up terms - Fewer meetings. If you're not contributing, walk out - Everyone works for the whole company, never for their department In our industry, it's often the other way around. And that's turning into a real competitive disadvantage.

German carmakers still work like it's the last century. In Germany, we hear it all the time: our car industry is too slow and too expensive. But why are the new competitors so much faster? Europe's carmakers and suppliers are often more than 100 years old. And so are their organizations. Today the big ones employ hundreds of thousands of people. When an organization gets that big, things start happening that nobody planned. The same part has one name in engineering and another in purchasing. And sales calls it something else again. That's how silos form: departments that work side by side but understand each other less and less. So you need people in between to connect them. Those teams become departments of their own. And turn into silos themselves. For a long time, that was fine. The competition had the same problems. Until a new generation showed up.

The electric car is destroying the German car industry. Just not the way everyone thinks. For decades the car business was a sure thing. A stable market. In all that time almost no new carmakers emerged. And whoever was already inside had it easy. The reason: the combustion engine was the moat around the car industry. It was so complex that it worked as a barrier to entry. Anyone who wanted into the market had to pull off 2 things at once: - Master that complexity - And then sell in large volumes right away, just to make the numbers work The battery drained that moat. The complexity was gone, and suddenly almost anyone could build a car. And that's what happened. A whole generation of new carmakers showed up at once, led by Tesla. The part that really hurts in Germany: mechanical engineering no longer sets you apart. And that was the very thing that made a car valuable. So anyone who still wants to stand out has to do it somewhere else. The difference now comes from the software. The Gartner Digital Automaker Index measures how well carmakers are set up for that.

"I don't need all the gimmicks. I want to get from A to B." I hear that a lot. Behind it is an assumption, and it's especially common in Germany. Software in a car means: - The karaoke app - A big screen - A voice assistant that's a little too dumb - An add-on, an option you tick or you don't The follow-up I hear just as often: "The Chinese are better at the apps and the toys. But other than that, we build better cars." One thing doesn't fit that picture. Software decides the 3 things the German car industry struggles with most: - Cost - Development time - And adapting a car to different markets And the next technology wave builds on that software. Germany still hasn't really understood that. PS: The image is AI-generated

We're too expensive. That's the standard German explanation for our car crisis. Cut wages and energy costs, and the industry is saved. I don't buy it. Last Thursday VW signed off on the biggest restructuring in its history. Everyone here is talking about plants and jobs. The collapse that caused it happened somewhere else. VW in China: - 2019: 4.23 million cars, 4.4 billion euros of profit - 2025: 2.69 million cars, just under 1 billion euros In the rest of the world sales fell by around 7% over the same 6 years. So VW's problems started in China. Without China there'd be no crisis today. One fact keeps getting left out of the debate. VW builds its Chinese cars in China: - Chinese workers - Chinese wages - Chinese energy prices German plants can cut costs as much as they want. That won't sell one more car in China. Don't get me wrong: Germany does have high costs. They just have nothing to do with the collapse in China. The problem is the product. Products come out of engineering, and VW's engineering sits in Germany. It stopped delivering what the market wants.

Volkswagen has decided to stop building its own car technology. Last Thursday the board signed off on the biggest restructuring in the company's history. The full plan had leaked a few days earlier. Here in Germany almost all of the coverage is about the plants. 4 of them stop building cars between 2031 and 2034. There's a fight over every job in them. That's the loud part. The part that decides what VW becomes got far less attention. VW is cutting its own engineering by 35% to 50%. Other companies do that work now: - Software and electronics from Rivian in the West and from XPENG in China - The AI that drives the car from XPENG, and in the West probably Nvidia or Wayve - Battery cells mostly from suppliers What stays in-house: body, chassis, interior, design. And final assembly. So VW still builds cars. It just doesn't develop the technology inside them anymore.

Germany's biggest car market is now its biggest competitor. CNBC asked me how this looks from a German perspective. Honestly, like a perfect storm. China has been the most important market for every German carmaker. The numbers there have fallen for 6 years straight and the trend still points down. We were convinced we had a technology lead. We were a little too convinced. While we were defending the technologies we were good at, China took the lead in the ones that decide the next car.

Only 1 of the 10 best-selling cars in China last month has a combustion engine. It sits in 10th place, and it's a Toyota. 8 of the 10 brands are Chinese. The other 2 are Tesla and Toyota, so no European brand made the list at all. The car on top is the Geely Xingyuan. It sold 32,306 units in July, and most people outside China have never heard of it.