A big bet on electric vehicles

Renault’s Twizy electric car received attention at the Frankfurt Auto Show. Only 0.2 percent of all cars registered in Europe are hybrid or electric.
Thomas Lohnes/Getty Images
Renault’s Twizy electric car received attention at the Frankfurt Auto Show. Only 0.2 percent of all cars registered in Europe are hybrid or electric.

FRANKFURT — Judging by the slew of electric and hybrid vehicles being rolled out at the Frankfurt Auto Show, it might seem carmakers are tapping a large and eager market.

But few people buy such cars — yet.

More and more automakers are coming out with electric versions of existing vehicles — such as Volkswagen’s all-electric Up! city car and Golf compact — or ones they have designed as electrics, like BMW’s small electric city car i3.


Analyst Christoph Stuermer at IHS automotive called Frankfurt “the first full-throttle electric propulsion show” that is about “getting electric drive cars out of the eco-nerd, tree-hugger segment and into the cool group.”

Get Talking Points in your inbox:
An afternoon recap of the day’s most important business news, delivered weekdays.
Thank you for signing up! Sign up for more newsletters here

To whet appetites, automakers are making high-performance, luxury versions that give up little or nothing in performance to conventional models. BMW’s i8 goes from zero to 100 kilometers per hour (0-62 miles per hour) in a speedy 4.5 seconds. Audi’s Quattro sport concept — meaning it is for demonstration, not for sale — is an aggressive-looking sports car with large air intakes flanking the grille and a whopping 700 horsepower from its hybrid drive. The company says it can reach 190 miles per hour.

The Mercedes S-Class plug-in hybrid version, meanwhile, has a powerful six-cylinder internal combustion engine plus an all-electric range of about 20 miles. This way, owners could commute all-electric during the week, recharging overnight — but use the gasoline engine on a family vacation. The company says mileage is 78 miles per gallon.

All this to cater to a market that does not really exist in mass terms. Only 0.2 percent of all cars registered in Europe are hybrid, which combines batteries with internal combustion engines, or electric, according to the ACEA European automakers association. In the United States, the Toyota Prius hybrid has broken into the top 10 selling passenger cars. However, electric vehicles have struggled to increase sales numbers because of high prices and range anxiety: buyers’ fear of running out of power.

Analysts and executives say there are solid reasons to make and promote such cars. They can help lower average fleet emissions to meet government requirements. And automakers want to be ready in case governments, perhaps in heavily polluted China, push people into emission-free vehicles.


“Short term, nobody will get a return on these investments,” Daimler AG chief executive Dieter Zetsche said. “But definitely, long term, the development will go in this direction, and if you don’t learn this lesson today you will not be in the game tomorrow.”

“All these technologies have to be developed further and you can only do that, including industrial processes to reduce costs, by selling them.”

Volkswagen’s chief executive, Martin Winterkorn, said one key to getting the hybrid and electric market moving is to reduce the cost of the most expensive element — the battery. The company’s goal is to cut the cost of a unit of battery power by a factor of five over the next several years.

Winterkorn said the company included electric and hybrid models in its multiplatform manufacturing system. This standardizes parts and allows the same assembly line to produce multiple vehicles. That means a new electric car could have modest sales numbers — but not involve the expense of additional plant capacity and parts design.

The US government is requiring automakers to increase fleet mileage, and the European Union is requiring them to cut emissions by 2020. Auto analysts say electrics could get a further push if China or its biggest cities start encouraging or requiring them.


One of the biggest bulls is Renault-Nissan chief executive Carlos Ghosn, whose company has bet heavily on the all-electric Leaf. He said when China acts to reduce emissions, it will mean ‘‘the explosion of the electric car.’’