By William Boston 

PARIS -- Elon Musk has long had the stage to himself as he championed zero-emission vehicles, and his upstart company, Tesla Motors Inc., became the touchstone for battery-powered cars.

When nearly half a million Tesla fans paid $1,000 each this spring to reserve the company's next-generation Model 3 ahead of its late-2017 launch, many auto executives scoffed.

"Let's see if they can build them," Thomas Weber, board member in charge of research and development at Daimler AG, said at the time.

Now, the enormous hype around Tesla's Model 3 preorders, slowly rising consumer demand and looming emissions regulation appears to have jolted conventional auto makers into action.

At the Paris Auto Show, which begins this week, major auto makers unveiled plans to accelerate development of electric vehicles over the next few years.

Volkswagen AG, still reeling from its emissions cheating scandal sought to show it had cleaned up its act. It presented a concept vehicle, a prototype of a battery-powered, fully self-driving Golf that the company said could go into mass production in 2020. The company is planning to introduce 30 new electric vehicle models by 2025.

"This car is to fight Tesla and the others, not our conventional competitors," said Herbert Diess, head of the Volkswagen passenger-car brand. "We have to take them very seriously. It's not rocket science. The other competitors are making great progress."

Until now, government incentives have driven the adoption of electric vehicles in many markets. Norway and the Netherlands, two of the smallest auto markets, became the biggest markets for electric vehicles through subsidies and other incentives to promote electric cars, which are still more expensive than conventional gasoline and diesel vehicles.

But over the next decade stricter emissions targets in Europe, the U.S. and China will increase the costs of developing conventional combustion engines. Falling battery costs will also make electric vehicles more competitive. By 2030, AlixPartners, a consultancy, predicts that electric vehicles will largely replace diesel, especially in smaller cars.

"This will go down as one of those years where it all started to change, " says Andrew Bergbaum, managing director at AlixPartners.

European Union sales of electric vehicles -- battery-powered, extended-range vehicles, fuel cell vehicles, and plug-in hybrids -- rose 17% to 70,127 vehicles in the first half of this year from the same period last year, according to the European Automobile Manufacturers' Association.

In Paris, Daimler's Mercedes-Benz unveiled a battery-powered sport-utility vehicle, a direct competitor to Tesla's Model X, which will have a range of 310 miles on a single charge and is slated to launch in 2020. The vehicle will be part of a new sub-brand of Mercedes called EQ.

Daimler CEO Dieter Zetsche acknowledged that manufacturers were still suffering from an oversupply of electric vehicles in a market where consumer demand remained weak because of the high cost of the vehicles and a lack of charging stations, but suggested the situation could change soon.

"When will the customer independent of regulation and independent of incentives consider electric vehicles fully competitive combustion engines? We are convinced that within our planning period we will see the tipping point," he said.

Sports car maker Porsche, owned by Volkswagen, took the wraps off a plug-in hybrid version of its sporty Panamera sedan that will combine a 462-horsepower 2.9-liter V-6 twin turbo engine built by Audi with an electric motor that has 136 horsepower.

But Porsche's big leap into electric autos comes with its Mission-E, which was unveiled at last year's Frankfurt Auto Show and is expected to be built beginning in 2020.

Paris also will see the launch of a number of mass-market electric cars.

Volkswagen plans 30 new electric vehicle models over the next decade; by 2025, one of every four cars it sells will be pure electric or plug-in hybrid, the company has said.

General Motors Co. launched the Chevrolet Bolt in the U.S. and will follow in Paris with the Ampera-E, a battery-powered compact that resembles BMW AG's i3 electric city-car.

Amid the rush, some are more cautious.

For instance, BMW recently extended the range of its i3, but the model is struggling, selling only around 25,000 vehicles last year.

Nevertheless, Ian Robertson, BMW board member in charge of sales, dismissed criticism that the Munich-based company's electric vehicle strategy was in disarray, saying the company was first among its competition to build an electric vehicle.

"There are plenty of companies out there playing catch up. We're delivering to real customers," he said.

Write to William Boston at william.boston@wsj.com

 

(END) Dow Jones Newswires

September 29, 2016 15:49 ET (19:49 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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