Electric Cars Dominate Frankfurt Auto Show
Electric Cars Dominate Frankfurt Auto Show
By William Boston and Christina Rogers Updated Sept. 11, 2019
1:29 pm ET
FRANKFURT—European auto
makers have plowed tens of billions of dollars into developing electric cars
and hybrids to comply with stricter restrictions on tailpipe
emissions. Now they face the challenge of selling those vehicles.
Volkswagen AG,
Porsche and Daimler AG’s Mercedes-Benz
all unveiled electric models at this week’s Frankfurt auto show that will be
heading to dealerships soon. Executives said more hybrid and plug-in models
were on the way, as part of a broader push to electrify large parts of their
lineups.
However, with prices still high and consumer demand
lukewarm for electrics, the industry is calling on European governments for
assistance, asking for tax subsidies and regulatory incentives to make the cars
more affordable and appealing to buyers.
“The
electric car will not make its way naturally. Incentives will play a huge
role,” Volkswagen Chief Executive Herbert Diess said. The world’s largest auto
maker launched a new all-electric compact car,
the ID.3, on Tuesday.
Electric-car
sales in Europe, which has some of the world’s toughest emissions requirements,
are still anemic. In the first half of this year, full electric and plug-in
hybrid vehicles accounted for just 2.4% of overall vehicle sales in the
European Union.
Globally,
the market for electric cars also remains a tiny niche, but car companies and
their parts suppliers say they have little choice but to shift the bulk of
their research budgets to battery-powered models.
Tougher
emissions rules in Europe, China and the U.S. make it difficult for companies
to hit the targets for reducing tailpipe air pollutants without selling more
electrified models. That has prompted many auto makers to pour money into
battery technology and build out a network of roadside chargers to support
refueling. Volkswagen, for instance, has invested nearly $1 billion in
Swedish startup Northvolt AB to build a battery factory in Germany.
Profits
at auto makers such as Daimler and BMW AG have
swooned amid sizable investments made in electric cars, but the companies say
there is no alternative. “We have to invest and we are better placed than some
to pay the price. Electric cars do not come for free,” BMW Chief Finance Officer
Nicolas Peter said.
Producing
an electric car generally costs $12,000 more than making a comparable gasoline
car and parity won’t be reached for about five years, according to consulting
firm McKinsey & Co. The battery alone costs between $5,500 to $7,700 per
vehicle, Volkswagen’s Mr. Diess said.
Without
a significant technological breakthrough, auto makers recognize they will have
to rely on building volume and economies of scale to help bring prices down.
“There’s
no doubt in our minds we have to drive these costs down over the next many
years,” Daimler CEO Ola Källenius said. “You cannot exactly influence what
customers will buy.” The company’s Mercedes brand this week unveiled a concept
for a fully electric version of its flagship S-class sedan.
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