"Tesla killer"

German luxury cars go electric

electric car sales germany
Wait until you see the electric bill. Source: dpa

For more than three years, engineers at Audi have been carefully piecing together a radically new car. They call the e-tron the game-changer, or sometimes “the Tesla killer.”

Now, the e-tron is almost ready. The 2-ton SUV boasts two electric engines, 435 horsepower and a range of 500 kilometers per charge, and will roll off the company’s Belgian production line late this summer, the first of a new wave of all-electric German luxury cars. “It’ll be a conqueror,” says Rupert Stadler, the CEO of the Volkswagen subsidiary.

In the last few years, the German car industry has been waking up in a cold sweat, afraid that it has arrived late and under-armed to the battle that will shape the car industry in the coming decades: the shift to electric cars, flanked by self-driving vehicles. Every major manufacturer, including Audi, VW, BMW, Porsche and Daimler, is rushing to get high-end electric vehicles into production, having realized the combustion engine, which, while still highly profitable, is seen as a compromised and ultimately inferior technology.

Suddenly it seems like the writing is on the wall. There is a serious possibility of diesel bans in large German cities such as Hamburg, Munich and Stuttgart, while China, the world’s largest car market, will impose fixed e-car quotas on all manufacturers next year. And in 2021, the next ratchet in the EU’s fuel-efficiency regulations becomes law, in effect requiring commercial fleets to go partially electric. In the longer term, the combustion engine itself may face a total ban, disappearing from everyday life.

Volkswagen now believes the diesel boom damages the European car industry more than it helps it.

Excuses that customers don’t want electric cars have been invalidated by the rise of Tesla, even if production problems have taken some of the gloss off the innovative Californian carmaker. Many industry voices are saying that 2018 will decide if the German industry can successfully manage the biggest change in a generation.

Audi’s e-tron will have competition. This summer, British competitor Land Rover Jaguar launches the I-Pace, a fully electric crossover sedan. Next year, a Porsche electric sports car hits the road, promising acceleration of zero to 100 kph (62 mph) in 3.5 seconds.

The major manufacturers will make even bigger moves in 2019 and 2020, launching entire ranges of all-electric models. Volkswagen plans to introduce mass-market electric vehicles in 2020, starting with the i.D. It’s an all-electric hatchback “like a Golf on the outside and a Passat on the inside,” says Herbert Diess, managing director of the core VW brand. After that, electric VW cars will launch in quick succession, including an SUV and a battery-powered version of the iconic Volkswagen camper van.

Volkswagen will invest €20 billion ($24.1 billion) in electric vehicles by 2025, when it wants to have 50 models on the market, selling more than 2.5 million a year. The consensus is clear: VW, Daimler and BMW all say they expect electric to capture around 25 percent of the global car market by the mid-2020s, with some regional variation.

Next year Daimler launches the Mercedes sub-brand EQ, with a dozen electric models, by 2023. Also in 2019, BMW begins its own rollout with an electric Mini, with an entire range of electric models by 2020, including a fully electric X3 SUV. The Munich-based manufacturer will be hoping for no repeat of its earlier, probably premature attempt to go electric. Early versions of its BMW i3 series, first sold in 2013, were plagued with range problems and other technical difficulties, and widely criticized as overpriced.

0200216178
Meet the e-tron. Source: Audi

Stylish, eye-catching design will be crucial for the new electric vehicles to succeed. Tesla already made electric cars cool, and manufacturers need their e-vehicles to appeal to customers’ desires, not just their environmental conscience.

But sexy cars will go nowhere without proper charging infrastructure. Manufacturers now see 500 kilometers as the minimum range acceptable to consumers. Across Europe, half a dozen consortia are pushing to rapidly expand charging capacities, reassuring buyers that electric cars are viable for long-distance as well as city driving.

In a much-publicized speech last month, VW CEO Matthias Müller said the German government should help make the move to electric easier, phasing out €8.5 billion in tax subsidies given to diesel-engine cars, and moving that funding to supporting electric vehicles. Although green groups welcomed his suggestion, his bold suggestion is reported to have gone down badly among other senior auto executives.

Cool-headed calculation underlies Mr. Müller’s stance: Volkswagen now believes the diesel boom is damaging the European car industry more than it is helping it. Without a large-scale switch to electric, goes the argument, the German industry runs the risk of massive pollution penalties, while inexpensive diesel engines choke off demand for electric cars.

Even with subsidies, however, electric vehicles would have many hurdles left to clear. With battery technology changing fast, customers may be reluctant to buy e-cars that risk obsolescence. In 10 years’ time, today’s batteries may be a dead technology, replaced by inductive charging or some as-yet-unknown innovation.

Ultimately, rapid change may prompt a major shift away from car buying and toward car-sharing — one reason why BMW and Mercedes are currently in talks about a merger of their respective car-share subsidiaries. Electric engines may only be the first step towards even greater change, featuring fleets of driverless cars, piloted by artificial intelligence.

Markus Fasse writes about the aviation and automobile industry. To contact the author: fasse@handelsblatt.com

We hope you enjoyed this article

Make sure to sign up for our free newsletters too!