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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