The ‘energy crisis is solved’ and the German economy is safe, Bundesbank’s Nagel says
The headquarters of the European Central Bank (ECB) pictured on February 03, 2022 in Frankfurt, Germany.
Thomas Lohnes | Getty Images News | Getty Images
Germany’s energy worries are over and Europe’s largest economy has the “inherent strength” to recover from the dual shocks of the pandemic and the war in Ukraine, according to Bundesbank President Joachim Nagel.
The International Monetary Fund on Tuesday projected the German GDP will contract by 0.1% in 2023, becoming the second worst performer among major economies behind the U.K., before expanding by 1.1% in 2024.
Central to concerns about the economic outlook for Germany and the wider continent over the past year has been the potential for an energy crisis, as Europe strives to curb its reliance on Russian gas following Moscow’s full-scale invasion of Ukraine.
German output decreased by 0.4% in the fourth quarter and is expected to contract again in the first quarter of 2023, entering a technical recession.
Nagel told CNBC on the sidelines of the IMF Spring Meetings that he is “more positive than the IMF” and does not see a recession this year.
“The German economy proved a lot over the past couple of weeks and months, so the adaptation capacity of the German industry is pretty high, the energy crisis is more or less solved. So we had a really worried situation in the past, but this is now over, and the outlook is good,” he told CNBC’s Joumanna Bercetche.
He asserted that Germany’s progress in diversifying its liquefied natural gas supply away from Russia, and its increased storage — resulting from built up capacity during the mild winter — meant the country’s economy is well placed to weather the next cold season as well.
The latest available purchasing managers’ index readings showed German manufacturing, which accounts for around a fifth of the country’s economy, experienced its sharpest fall in activity for almost three years in March and hit its lowest level since May 2020.
However, Nagel claimed that this was down to lingering effects of the Covid-19 pandemic and Russia’s war in Ukraine, insisting that “we shouldn’t forget where we came from.”
“The German industry has a good capability to deal with the situation, there is this inherent strength of the German economy, and I believe they will overcome this, and they will go back to the levels we saw before the pandemic,” he said.
Sticky core inflation
The European Central Bank hiked interest rates by another 50 basis points in March to bring its main rate to 3%, as the continent continues to grapple with high inflation.
Headline inflation across the euro zone fell to 6.9% in March from 8.5% in February, driven by cooling energy costs. But core inflation — which strips away volatile food, energy, alcohol and tobacco prices — increased to an all-time high of 5.7%.
Nagel said the persistence of high core inflation showed the ECB Governing Council, in which he is considered one of the more hawkish members, has further to go in tightening monetary policy.
He expects core inflation to eventually follow the headline figure downwards, but reiterated that policymakers have to “stay really alerted when it comes to the inflation story.”
“What is also important to me, we went through some financial market turbulence uncertainty over the last five weeks and now we have to find out what was the impact out of that, and we have to wait for the incoming data until we have our next meeting in May, and then we will see,” he said.
German banking ‘very robust’
Financial markets were roiled in March by concerns about the banking sector. The collapse of U.S.-based Silicon Valley Bank early last month triggered contagion fears that eventually took down several U.S. regional lenders and led to the emergency rescue of Credit Suisse by fellow Swiss giant UBS.
The ECB went ahead with a 50 basis point hike to interest rates despite concerns about the economic impact of the banking turmoil, and Nagel hopes this sent an important message to markets.
“There is no contradiction between what we have to do on the price stability side and on the financial stability side,” he said.
“We have different instruments to tackle the price issues and the financial stability issues, so it was an important message to the financial market participants that we are very committed when it comes to fighting against inflation.”
Deutsche Bank shares sold off sharply over a few days in March after a sudden spike in the cost of insuring against its default. Analysts largely attributed this to misplaced market panic, but also to concerns about the German lender’s well-documented exposure to commercial real estate, which is considered a particularly weak link in the U.S. economy.
Nagel insisted the German banking system is safe and sound.
“I think we have to be vigilant when it comes for example to the commercial banking sector, but let me take this opportunity to say something about the German banking sector — I think the German banking sector is very robust,” he said.
“I think, compared to 15 years ago, they are much better capitalized, better liquidity situation, so I do not have doubts.”
Although he reaffirmed the ECB’s commitment to fighting inflation, Nagel acknowledged that policymakers “have to be cautious” and keep an eye on parts of the economy that may be affected if rates continue to rise.
Elon Musk isn’t happy about Trump passing the Big Beautiful Bill and killing off the $7,500 EV tax credit – but there’s a lot more bad news for Tesla baked into the BBB. We’ve got all that and more on today’s budget-busting episode of Quick Charge!
We also present ongoing coverage of the 2025 Electrek Formula Sun Grand Prix and dive into some two wheeled reports on the new electric Honda Ruckus e:Zoomer, the latest BMW electric two-wheeler, and more!
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Environment
FERC: Solar + wind made up 96% of new US power generating capacity in first third of 2025
Solar and wind accounted for almost 96% of new US electrical generating capacity added in the first third of 2025. In April, solar provided 87% of new capacity, making it the 20th consecutive month solar has taken the lead, according to data belatedly posted on July 1 by the Federal Energy Regulatory Commission (FERC) and reviewed by the SUN DAY Campaign.
Solar’s new generating capacity in April 2025 and YTD
In its latest monthly “Energy Infrastructure Update” report (with data through April 30, 2025), FERC says 50 “units” of solar totaling 2,284 megawatts (MW) were placed into service in April, accounting for 86.7% of all new generating capacity added during the month.
In addition, the 9,451 MW of solar added during the first four months of 2025 was 77.7% of the new generation placed into service.
Solar has now been the largest source of new generating capacity added each month for 20 consecutive months, from September 2023 to April 2025.
Solar + wind were >95% of new capacity in 1st third of 2025
Between January and April 2025, new wind provided 2,183 MW of capacity additions, accounting for 18.0% of new additions in the first third.
In the same period, the combination of solar and wind was 95.7% of new capacity while natural gas (511 MW) provided just 4.2%; the remaining 0.1% came from oil (11 MW).
Solar + wind are >22% of US utility-scale generating capacity
The installed capacities of solar (11.0%) and wind (11.8%) are now each more than a tenth of the US total. Together, they make up almost one-fourth (22.8%) of the US’s total available installed utility-scale generating capacity.
Moreover, at least 25-30% of US solar capacity is in small-scale (e.g., rooftop) systems that are not reflected in FERC’s data. Including that additional solar capacity would bring the share provided by solar + wind to more than a quarter of the US total.
With the inclusion of hydropower (7.7%), biomass (1.1%), and geothermal (0.3%), renewables currently claim a 31.8% share of total US utility-scale generating capacity. If small-scale solar capacity is included, renewables are now about one-third of total US generating capacity.
Solar is on track to become No. 2 source of US generating capacity
FERC reports that net “high probability” additions of solar between May 2025 and April 2028 total 90,158 MW – an amount almost four times the forecast net “high probability” additions for wind (22,793 MW), the second-fastest growing resource. Notably, both three-year projections are higher than those provided just a month earlier.
FERC also foresees net growth for hydropower (596 MW) and geothermal (92 MW) but a decrease of 123 MW in biomass capacity.
Taken together, the net new “high probability” capacity additions by all renewable energy sources over the next three years – i.e., the bulk of the Trump administration’s remaining time in office – would total 113,516 MW.
FERC doesn’t include any nuclear capacity in its three-year forecast, while coal and oil are projected to contract by 24,373 MW and 1,915 MW, respectively. Natural gas capacity would expand by 5,730 MW.
Thus, adjusting for the different capacity factors of gas (59.7%), wind (34.3%), and utility-scale solar (23.4%), electricity generated by the projected new solar capacity to be added in the coming three years should be at least six times greater than that produced by the new natural gas capacity, while the electrical output by new wind capacity would be more than double that by gas.
If FERC’s current “high probability” additions materialize, by May 1, 2028, solar will account for one-sixth (16.6%) of US installed utility-scale generating capacity. Wind would provide an additional one-eighth (12.6%) of the total. That would make each greater than coal (12.2%) and substantially more than nuclear power or hydropower (7.3% and 7.2%, respectively).
In fact, assuming current growth rates continue, the installed capacity of utility-scale solar is likely to surpass that of either coal or wind within two years, placing solar in second place for installed generating capacity, behind only natural gas.
Renewables + small-scale solar may overtake natural gas within 3 years
The mix of all utility-scale (ie, >1 MW) renewables is now adding about two percentage points each year to its share of generating capacity. At that pace, by May 1, 2028, renewables would account for 37.7% of total available installed utility-scale generating capacity – rapidly approaching that of natural gas (40.1%). Solar and wind would constitute more than three-quarters of installed renewable energy capacity. If those trend lines continue, utility-scale renewable energy capacity should surpass that of natural gas in 2029 or sooner.
However, as noted, FERC’s data do not account for the capacity of small-scale solar systems. If that’s factored in, within three years, total US solar capacity could exceed 300 GW. In turn, the mix of all renewables would then be about 40% of total installed capacity while the share of natural gas would drop to about 38%.
Moreover, FERC reports that there may actually be as much as 224,426 MW of net new solar additions in the current three-year pipeline in addition to 69,530 MW of new wind, 9,072 MW of new hydropower, 202 MW of new geothermal, and 39 MW of new biomass. By contrast, net new natural gas capacity potentially in the three-year pipeline totals just 26,818 MW. Consequently, renewables’ share could be even greater by mid-spring 2028.
“The Trump Administration’s ‘Big, Beautiful Bill’ … poses a clear threat to solar and wind in the years to come,” noted the SUN DAY Campaign’s executive director, Ken Bossong. “Nonetheless, FERC’s latest data and forecasts suggest cleaner and lower-cost renewable energy sources may still dominate and surpass nuclear power, coal, and natural gas.”
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Tesla has been forced to reimburse a customer’s Full Self-Driving package after an arbitrator determined that the automaker failed to deliver it.
Tesla has been promising its car owners that every vehicle it has built since 2016 has all the hardware capable of unsupervised self-driving.
The automaker has been selling a “Full Self-Driving” (FSD) package that is supposed to deliver this unsupervised self-driving capability through over-the-air software updates.
Almost a decade later, Tesla has yet to deliver on its promise, and its claim that the cars’ hardware is capable of self-driving has been proven wrong. Tesla had to update all cars with HW2 and 2.5 computers to HW3 computers.
In January 2025, CEO Elon Musk finally admitted that HW3 also won’t be able to support self-driving and said that Tesla will have to upgrade the computers. 6 months later, Tesla has yet to communicate a plan for retrofits to owners.
Tesla is now attempting to deliver its promise of unsupervised self-driving on HW4 cars, which have been in production since 2023-2024, depending on the model. However, there are still significant doubts about this being possible, as the best available data indicate that Tesla only achieves about 500 miles between critical disengagements with the latest software on the hardware.
The situation is creating a significant liability for Tesla, which already needs to replace computers in millions of vehicles, and it may need to do so in millions more.
On the other hand, many customers are losing faith in Tesla’s ability to deliver on its promise and manage this computer retrofit situation. Some of them have been seeking to be reimbursed for their purchase of the Full Self-Driving package, which Tesla sold from $8,000 to $15,000.
A Tesla owner in Washington managed to get the automaker to reimburse the FSD package, but it wasn’t easy.
The 2021 Model Y was Marc Dobin and his wife’s third Tesla. Due to his wife’s declining mobility, Dobin was intrigued about the FSD package as a potential way to give her more independence. He wrote in a blog post:
But FSD was more than hype for us. The promise of a car that could drive my wife around gave us hope that she’d maintain independence as her motor skills declined. We paid an extra $10,000 for FSD.
Tesla’s FSD quickly disillusioned Dobin. First, he couldn’t even enable it due to Tesla restricting the Beta access through a “safety score” system, something he pointed out was never mentioned in the contract.
Furthermore, the feature required the supervision of a driver at all times, which was not what Tesla sold to customers.
Tesla doesn’t make it easy for customers in the US to seek a refund or to sue Tesla as it forces buyers to go through arbitration through its sales contract.
That didn’t deter Dobin, who happens to be a lawyer with years of experience in arbitration. It took almost a year, but Tesla and Dobin eventually found themselves in arbitration, and it didn’t go well for the automaker:
Almost a year after filing, the evidentiary hearing was held via Zoom. Tesla produced one witness: a Field Technical Specialist who admitted he hadn’t checked what equipment shipped with our car, hadn’t reviewed our driving logs, and didn’t know details about the FSD system installed on our car, if any. He hadn’t spoken to any sales rep we dealt with or reviewed the contract’s integration clause.
There were both a Tesla lawyer and an outside counsel representing Tesla at the hearing, but the witness was not equipped to answer questions.
Dobin wrote:
He was a service technician, not a lawyer or salesperson. But that’s who Tesla brought to the hearing. At the end, I genuinely felt bad for him because Tesla set him up to be a human punching bag—someone unprepared to answer key questions, forced to defend a system he clearly didn’t understand. While I was examining him, a Tesla in-house lawyer sat silently, while the company’s outside counsel tried to soften the blows of the witness’ testimony.
He focused on Tesla’s lack of disclosure regarding the safety score and the fact that the system does not meet the promises made to customers.
The arbitrator sided with Dobin and wrote:
The evidence is persuasive that the feature was not functional, operational, or otherwise available.”
Tesla was forced to reimburse the FSD package $10,000 plus taxes, and pay for the almost $8,000 in arbitration fees.
Since Tesla forces arbitration through its contracts, it is required to cover the cost.
Electrek’s Take
This is interesting. Tesla assigned two lawyers to this case in an attempt to avoid reimbursing $10,000, knowing it would have to cover the expensive arbitration fees – most likely losing tens of thousands of dollars in the process.
It makes no sense to me. Tesla should have a standing offer to reimburse FSD for anyone who requests it until it can actually deliver on its promise of unsupervised self-driving.
That’s the right thing to do, and the fact that Tesla would waste money trying to fight customers requesting a refund is really telling.
Tesla is simply not ready to do the right thing here, and it doesn’t bode well for the computer retrofits and all the other liabilities around Tesla FSD.
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