E-Mobility Growth

Tempt, Don't Ban

Ein Elektrofahrzeug der Marke Citro‘n C-Zero steht am Donnerstag (06.09.2012) an einer Ladestation am Potsdamer Platz in Berlin. Citro‘n und die Deutscher Bahn starten ein gemeinsames Carsharing-Projekt "Citroen multicity", welches nach Betreiberangaben das erste rein elektrische Angebot in Deutschland sein soll. Foto: Ole Spata dpa/lbn [ Rechtehinweis: Verwendung weltweit, usage worldwide ]
E-cars are yet to make a dent in the German car market.
  • Why it matters

    Why it matters

    A sudden forced move to e-mobility could seriously upset the German auto industry which is still struggling to make inroads in the e-car market.

  • Facts


    • A resolution in Germany’s upper legislative chamber calls for only “emissions-free passenger cars” to be allowed in the E.U. by 2030.
    • The planned electoral campaign of Germany’s Green Party supports such a prohibition of combustion engines.
    • Currently, gas-guzzling sports utility vehicles are top sellers in Germany while electric cars have a market share of just 0.3 percent.
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You don’t have to be a prophet to recognize the combustion engine has no future. It won’t be possible to meet climate goals set by countries all over the world without e-mobility. From Shanghai to Berlin and beyond, complaints abound of bad air quality because of high nitrogen-oxide emissions. The need for emissions-free cars is clear.

Calls are growing louder to reduce the percentage of cars running on gasoline or diesel to zero, as soon as possible. Germany’s Green Party plans to mount its electoral campaign with a demand to ban combustion engines within a decade and a half.

In the Bundesrat, Germany’s upper legislative chamber, there are already proposals to drastically reduce their numbers. A resolution calls for “the tax- and levy-policies of member states” to be revamped “so that only emissions-free passenger cars are allowed throughout the E.U. at the latest from 2030.”

Politicians want to use an ultimatum to force industry to pursue the development of environmentally friendly models. The environment minister in the state of Schleswig-Holstein, the Green Party’s Robert Habeck, sees auto manufacturers demonstrating “rhetorical responsiveness even while actually behaving with stubbornness.”

A prohibition would make German auto giants look like dinosaurs in the face of this competition.

This reproach can’t be dismissed out of hand when looking at the status quo. Large sports utility vehicles are sold in droves while electric cars have a market share of just 0.3 percent. It’s also true that, compared to the competition from the United States and China, the German auto industry is lagging behind with new electric models.

But the call for a prohibition of combustion engines is dangerous wishful thinking. It’s wrong to assume that this would protect German automakers from crises in the post-fossil-fuel era. It’s more likely that the opposite would occur. A prohibition of the combustion engine would make it impossible for the German auto industry to maneuver.

The truth is that until now, no one is earning money with the electric car. Last year, the widely praised e-car pioneer Tesla lost $888 million (€799 million) – while producing only 50,000 cars whose average sticker price was $100,000. By comparison, some 3.2 million new cars were licensed in 2015 in Germany alone. Even if costs decline with a rise in production, investments in the billions will be necessary to offer sufficient numbers of electric cars at affordable prices.

Until now, companies have financed these investments with profits from selling cars fueled by gas or diesel. A prohibition would sabotage calculations for many automotive ranges whose development is underway.

For the auto industry, 14 years are only two developmental cycles. Combustion engines with low fuel consumption and relative environmental friendliness would not be developed further, and aging models would be on the roads for longer. Manufacturers could already write down investments they have made. At the same time, they would need to quickly raise massive amounts of capital in order to develop cars with alternative engines.

An industry employing 800,000 people can’t allow itself such a financial adventure.

Such a prohibition would primarily benefit foreign competitors who can cross-finance development with income from other commercial areas. The U.S. tech giant Apple, for example, is working on its own electric car. Chinese companies such as Geely have given themselves an advantage through inexpensive battery production and also enjoy indirect financial support from the state.

A prohibition would make German auto giants look like dinosaurs in the face of this competition.

What’s more, it’s superfluous. German firms are involved in a competitive battle already. If the electric car becomes significantly less expensive, it will be able to compete with combustion engines in 2030.

Nevertheless, the core of the demand for a ban is correct. Industry must be forced to stop investing primarily in the still-lucrative combustion engine, whose days are numbered. More than two-thirds of development investments continue to be devoted to diesel and gasoline models.

But in order to accompany the transition to a new era, politicians shouldn’t intervene in the way industry plans new models. Instead, the political process should create an environmental policy framework that the industry can handle.

Phasing-out subsidies for the combustion engine would be an effective instrument, as would environmentally friendly emissions standards. But a rapid expansion of charging stations and attractive conditions for research and development are also needed. Politics has to speed up things in these respects.

In the end, incentives could be more effective than compulsion.


To contact the author: bay@handelsblatt.com

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