Future Mobility

Electric Car Subsidies Are Not the Answer

Ein Chademo Aufladestecker für Elektrofahrzeuge steckt am 26.04.2016 bei der Hannover Messe in Hannover Niedersachsen in einem Nissan Leaf. Die USA sind dieses Jahr Partnerland der Messe. Foto: Ole Spata/dpa copyright dpa - Bildfunk
German's still aren't plugging into to e-cars, which many view as expensive and complicated.
  • Why it matters

    Why it matters

    The car industry has convinced the government that it cannot sell electric cars without financial incentives, but subsidies are not the most effective way to create a market.

  • Facts

    Facts

    • Chancellor Merkel’s plan would offer €600 million in subsidies for electric car buyers, with the automakers to match that amount.
    • Consumers would receive €4,000 for fully electric cars and €3,000 for hybrids.
    • The plan also includes €100 million in tax benefits and €300 million to create a network of charging stations along the autobahn.
  • Audio

    Audio

  • Pdf

Once your reputation is ruined, you need never be embarrassed again,” said 19th century German wit Wilhelm Busch, and that appears to be the new maxim of this country’s automobile industry.  First, it was industry giant Volkswagen that manipulated emissions software in its diesel cars . Then we received official confirmation of something we had long suspected: Manufacturers keep emission levels down in the laboratory, but not on the road. 

Now the industry wants state assistance to help sell its electric cars, which nobody wants. And that’s all in the context of climate protection. Of course, top managers at manufacturers tend to be engineers who are known for many qualities, but not notably their political sensitivity.  That is the only conceivable explanation of the arguments presented at the summit meeting in the chancellery.  It was, they said, the chancellor who had set the goal of having 1 million e-cars on Germany’s roads by 2020. And that is why the manufacturers had invested billions and brought new models onto the market.

So please, could the politicians now turn their hand to selling them – if necessary, by offering financial incentives for buyers?  Others point understandably to the billions of profits made by manufacturers, only a fraction of which they invest in marketing electric cars or use to offer the kind of conditions likely to woo reluctant customers.  

But the problem goes much further than that: A dispassionate observation is likely to conclude that the e-car is by no means the finished product.  That applies to the vehicle’s battery, as it does to the charging modus.  Everyone has a vision of an e-car connected by cable to a charging station. The normal charging process takes eight hours.  The disputes about a uniform plug have now been settled, and at great expense the government is prepared to install charging stations.  This is intended to reassure customers who fret about being stuck somewhere with an empty battery.

However, such charging stations could soon be obsolete, as a large number of firms are already working on charging by induction.  The car simply drives onto a panel from which the battery charges itself.  Researchers have also constructed e-cars that charge themselves via an induction panel during a journey. It’s no wonder that automobile manufacturers are calling for charging capacities of up to 150 kilowatt to at least be able to charge up vehicles quickly.  

No way are e-cars CO2-free. It’s just that the climate gases are created elsewhere, for example, in a lignite power station

The dream of an emission-free automobile is one thing, the reality quite another: Lucrative markets cannot be created by state decree.  Carmakers, representatives of utilities and others have met regularly with the government since 2010 with a view to implementing the 10 year plan for electric cars. But are they listening to potential customers? They want cars that are easy to use, not complicated. They want advanced features –  a plug doesn‘t fit the bill. Maybe they’ll want to park and charge their cars on an induction panel in a car park or at a service area or supermarket – and they will certainly want to do so quickly. And their on-board computer system should take care of payment.

When will we reach that stage? Certainly not by 2020.  And nobody, neither the government nor manufacturers, is talking about 1 million purely electric cars in circulation by then. They’re including hybrid vehicles.  But that is where realism ends. Electric cars are not CO2-free. The energy used to charge their batteries is created elsewhere, for example, in a lignite power station. Maybe that will change in 10 or 20 years.

We should look honestly at the market as it is: it’s a risky business. Perhaps the state will reward initial buyers, for example, with tax incentives or reductions for fleet managers.  But it could also be an innovator itself by instructing authorities and publicly owned companies to buy e-cars. Above all, the state has to support what is sustainably beneficial for society, even if a product fails: research and development of technology – not sales statistics.

The government also has to make the industry responsible, especially in maintaining Germany as an industrial location. And that should happen in an atmosphere of open-mindedness toward technology.  It may not be an election campaign winner, but it would be intelligent politics. An orderly framework with clear regulations and exclusions would make sales incentives superfluous.

Offering a scrapping bonus for old cars in 2009 was a dubious program to boost the economic climate. An incentive to buy will surely not guarantee the industry’s survival. BMW, Daimler and VW should shape their future like other companies that don’t have a direct line to the chancellery. New developments don’t come about due to fear of Google, Tesla and other high-tech firms: They are the result of ideas and innovations, exciting products and good offers.  

 

To contact the author: delhaes@handelsblatt.com

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