By William Boston and Christina Rogers
FRANKFURT -- The Frankfurt auto show has gone electric.
European auto makers and suppliers have plowed tens of billions
of dollars into developing electric cars and hybrids to meet the
continent's stricter restrictions on tailpipe emissions. Now, many
of those models have made their public debuts at the show and will
be heading to dealerships soon.
Volkswagen AG, the world's largest auto maker, rolled out a new
all-electric compact car Tuesday called the ID.3, while sports car
maker Porsche showed off the Taycan, a powerful, four-door sedan
that runs on battery power only.
Mercedes-Benz, the luxury car brand owned by Daimler AG,
unveiled a concept for a full-electric version of its flagship
S-class sedan at this week's motor show, which is among the world's
largest. Honda launched a battery-electric hatchback designed for
city driving, and even Lamborghini, a maker of Italian supercars,
revealed its first hybrid model.
The unveilings were coupled with pledges that more hybrid and
plug-in models were on the way as chief executives said this was
only the beginning in a broader push to electrify large parts of
their lineups.
However, with prices still high and consumer demand lukewarm for
electrics, industry executives called 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.
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's
prompted many auto makers to pour money into battery technology and
building 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.
Auto makers such as Daimler and BMW AG have seen their profits
swoon under the weight of the huge investments made in electric
cars, but 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 major 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 AG's CEO Ola Kallenius said.
"You cannot exactly influence what customers will buy."
The electric-cars showing in Frankfurt this week contrast
sharply with auto shows in Detroit and New York earlier this year,
where SUVs and pickup trucks took center stage and fewer plug-in
models made their debuts.
While auto makers are selling more electric models in the U.S.,
many buyers have taken advantage of low gasoline prices and
purchasing large vehicles that consume more fuel, rather than
less.
Many of the latest electric-car models can travel 200 miles or
more on a single charge -- a vast improvement from several years
ago when 100 miles or less was more typical. The new VW ID.3, for
instance, will offer a range of up to 550 kilometers, or 342 miles,
depending on the battery option.
But even with the expansion of range, potential customers are
still afraid of running down the battery on a longer journey and
not having a place to plug in. While the situation has improved and
new charging-station networks are under construction in Europe,
so-called "range anxiety" and the steep price of electric vehicles
remain the biggest obstacles, according to industry executives and
analysts.
Governments in China and the U.S. already offer hefty incentives
for electric-car buyers, but sales of hybrid and plug-in models
remain a fraction of overall sales there.
Porsche's North American President Klaus Zellmer said those
psychological barriers to making the switch from gasoline to
electric won't be easy to overcome. "The hurdles is we're talking
about a completely new technology," he said.
That's why the industry is calling on governments to lend a
hand.
Hildegard Wortmann, Audi's board member in charge of sales, said
Europe still has huge patches, where drivers cannot charge their
vehicles on the road.
She called on European governments to follow the example of
Norway, where incentives such as tax rebates for buyers and free
parking, have made it the first country to hit a tipping point:
more than half of its vehicle sales are electric.
"We need to take a look at Norway," Ms. Wortmann said. "This
really small country has shown the rest of the world how it is
done."
Write to William Boston at william.boston@wsj.com and Christina
Rogers at christina.rogers@wsj.com
(END) Dow Jones Newswires
September 11, 2019 07:39 ET (11:39 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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