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The electric cars are here. Now how about selling them

‘The next big thing is about affordable mobility’.

It only took a decade for traditional automakers to take electric cars seriously and offer more than a smattering of test-the-water models.

Now comes the hard part: Getting consumers to buy them.

At Frankfurt’s 2019 car show, Volkswagen Chief Executive Officer Herbert Diess laid it on thick, calling on governments to give up coal-fired power as he unveiled the electric ID.3 car-for-the-masses. At the Mercedes-Benz stand, where the Daimler brand was showing the prototype of an electric S-Class sibling, real beech trees framed massive screens displaying schools of digital fish.

The message to environmentally conscious consumers: we’re with you. But a marketing blitz alone won’t wash away the deep uncertainties facing electric cars — obstacles little changed since carmakers’ initial forays with models like the Nissan Leaf and BMW AG i3. Customers don’t like paying up for new technology they’re unsure about, and they’re worried they won’t reliably get to where they want to go.

“The next big thing is not going to be about the cars, because they will come,” Carlos Tavares, president of the European Automobile Manufacturers Association and CEO of Groupe PSA, said Wednesday. “The next big thing is about affordable mobility. The next big thing is about how we make this work for the biggest number of people.”

So far, electric cars have only proliferated in countries with significant sweeteners. Once they go, sales of battery models crater. Demand in China, the world’s biggest electric car market, fell 16% in August — its second straight decline — after the government scaled back subsidies. Carmakers can reduce prices, but then only cut into profitability that in most cases has been nonexistent.

Consumers are similarly sensitive elsewhere. Demand in Denmark collapsed when the government phased out tax breaks in 2016.

“We’ve been talking about EVs for years, but this year the real production cars showed up,” Max Warburton, an analyst at Sanford C Bernstein, wrote in a note. “Should we be celebrating these cars, given the poor margins that most will have?”

Across Europe, sales of new plug-in hybrids and fully-electric cars last year made up 2% of total registrations. That’s a tiny market to tussle over for the likes of VW’s ID.3, with a price point below 30 000 euros ($33 009), Tesla’s Model 3 and Mercedes’s gleaming lineup of plug-ins. Yet carmakers have little choice but to boost their offering to keep pace with regulation, or face fines.

Consumer demand “can’t be mandated,” Daimler CEO Ola Kallenius said at the show. Mercedes-Benz is adding at least 10 purely battery-powered cars through 2022 at a cost of more than 10 billion euros, starting with last year’s EQC SUV, so the carmaker’s lineup can to meet stricter emission limits.

A lot of factors are moving in the right direction. The ID.3’s price point and basic range of 330 kilometres (205 miles) sets the car apart from previous efforts that needed meticulous pre-planning for longer trips. At the top end, there’s now the $185 000 Porsche Taycan Turbo S, and a mid-range that’s rapidly filling out from SUVs like the Jaguar I-Pace and Audi e-tron.

Patchy charging infrastructure is improving too. Ionity, a consortium of Daimler, VW, Ford Motor, BMW and now Hyundai Motor, is on track to finish building a network of 400 European fast-charging stations by next year to make long-distance travel easier.

Lean years

For carmakers, this will mean some lean years — at least to 2025 when battery prices are expected to come down — during which lucrative conventional SUVs must subsidize poor returns from their electric cousins. VW will need “patience” until the ID.3 brings significant profit “joy,” Chairman Hans Dieter Poetsch said.

To bridge the gap, the industry is lobbying hard for governments to step up incentives to get to the oft-cited tipping point where driving without a combustion engine becomes normal. In Germany, home to VW, Mercedes and BMW as well as world-leading suppliers like Continental, the government sits down next week to discuss broad climate measures. Carmakers are hoping for a bigger slice of subsidies than they got so far.

The ACEA on Wednesday called on national governments to boost charging points in Europe to 2.8 million by 2030, a 20-fold increase from 2018.

“We need strong support, because if we don’t do it,” simply offering electric cars won’t be enough for sales to take off, PSA’s Tavares said.

© 2019 Bloomberg L.P.

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South Africans too conservative to even want to try hybrids. They white bakkie crowd would drive an ex wagon if it came with a vw badge.

I happen to drive a sedan, not a bakkie, and a BMW, not a VW. However, why would I want to pay a huge price premium for a thing that has a range of only 200km, takes hours to charge, and whose batteries need replacing after 6 years at a cost of R60000-R10000? Electric cars don’t make sense yet.

The premium is not really that significant and in some cases its non-existent.
And of course the real savings is in running costs.

Lets take your BMW, in the US a new 330i has a MSRP of 41K USD
If I compare that to the Tesla model 3 Standard Range plus with a selling price of 39K USD (With no incentives!)

Price : Tesla wins.
Speed: In a 0-100km race the Tesla also wins.
Range : It has a range of 380KM
Charging : DC quick charging at Tesla superchargers allows you to fully charge in around 40 mins.
Batteries : Ah the battery myth, Tesla warrants its batteries for 8 years or 100K miles, that means, after that time, it will have 70% of its initial capacity left, it does not at all need replacing, it will just have less range than it started out with
Tesloop a Tesla shuttle service has a Model X with 563000km on the clock and it has only had 14% battery degradation, I can’t think of a many ICE cars that can go over 500K km without almost having an entirely new engine at the end of it.

Well said @PJJ. Although the Toyota Fortuner can achieve about 500K km before an overhaul is needed. Tough thing that. Of course not many can afford it, so there is that…

We just need Apple to make an electric car, make it available day one day in 100 markets including ZA and these things will sell.

There is definitely not a demand problem, there is a delivery problem.

Yes, because the current ones sell sooo well in SA right?

We don’t have sales because we don’t have options, and we have a ridiculous 28% tax on EV’s simply because they are EV’s.

Currently your only options are high end cars like the BMW i3 and Jaguar I-Pace

How can you judge a market that doesn’t exist yet, give us a level playing field with ICE cars (no stupid import tax) and massmarket cars like the Renault Zoe, Tesla model 3 and Hyundai Ionic/Kona.

I am on my second i3 – that 300km+ range is definitely a big issue.

IMO the first market will be for two and more vehicle families. So the EV for daily, and a bakkie or suv for longdistance and space.

Funny thing is, I would love to see research about percentage of passenger cars that drive more than 300km per day and how often, if ever.

At the R500k plus prices
points most new cars, whether petrol electric or battery, owners fly and rent.

I think you are right Johan, EV’s will probably start taking a foothold in 2 car households first where a ICE car would be kept for long trips to places with inadequate charging options.

But then like you said, it raises a very good question, for daily driving, how much range do you really need?
With that in mind, I think any EV that has 100km range should be more than sufficient for the Joe Average commute, travel to work and plug-in at work, or plug in at home every night and you should never have a problem.

PJJ, my first i3 had about 150km range and that was tight a few times. All it takes is one or two unplanned trips. The new one, depending on how hard you drive it, is good for about 300km and that is proving ample. I don’t see the sense in adding 800kg of permanent weight (and expensive weight) just to claim a 700km range. That is like schlepping the springbok tight five around all the time in case you need to get pushed out of a ditch.

Yip, long distances are not an issue. Who (with any real wealth) drives to Durban for an Easter holiday anyway?

Porsche drove theirs for 3425 km in one day (with charging).

I think that the bakkies bois are just upset that it doesn’t consider their use case (yet) and deep down, they are worried thst they are being left behind.

Anything:

Bakkies are coming in electric. It would actually make a lot of sense as the battery chassis will give them better weight distribution even when empty, which is what 90% of the bakkies I see tend to be. The torque would also be great for bakkie jobs. A lot of the modern bakkies have small engines that only give decent torque at high revs. Electric is100% torque from one degree rotation of the wheel.

Was at a private game lodge in the Sabi sands and driving around and a electric Lancrusier sneaked up on us . Only thing we heard was tyre noise. Brilliant vehicle for game drives.

Well they got millions of people to smoke cigarettes to death..

good they have Bernstein on the job, ironic it was old Bernstein who run the campaign in the 1920!!

“Stupid” he called the people..

99.7 percent of educated scientists disagree with you. Not doctors in a trick study for an ad a century ago.

Maybe you should study more (or at all?).

The state of science literacy thanks to the public education legacy in isolationist SA is shocking. SA will surely lead (for once) the world on something: flat earthers, abtivaccers, teen pregnancy and climate change denialists.

I notice nobody has mentioned affordable , clean and reliable electricity from eishkom.what good is it when a few good intentioned people do their bit for the planet and the coal mines are polluting rivers where the ph is lower than vinegar ?

Well you have to understand the broader picture. Electric cars need less maintenance. As such, the manufactures have to also supply the power to supplement the loss in parts revenue. So they will build the charging stations and install the solar needed for that. That’s why the call from manufactures is “calling on governments to give up coal-fired power”

While I read everyone’s comments, my mind wandered and started to google RENAULT ZOE 🙂 Not bad looking either (remind me of Mazda-2 shape). Let’s hope Renault can usher in some more affordable EV’s in SA. The latest post 2016-model has a 400km range.

Interestingly, as one research EVs you notice how battery range continually increase with ongoing development, from initial production versions some years ago to that of today…and expect improved battery tech still to come 🙂

Also noted some EV car designers considers efficient “heat-pump” (reverse refrigeration cycle) technology for car interior cooling in summer (heat pumped out), and heat pumped in, during winter.

Aaaaah, the time for annual car maintenance….off I go to my mech…sorry, electrician to be checked out!

Having a bit a chuckle…I think the Rental Car company HERTZ should electrify their whole fleet: that will REALLY give their brand NEW meaning *lol*

Someone also recently made the joke that VW missed a massive marketing opportunity with the new ID3.

They could have called it a VoltsWagen 😛

…I understand that Harley Davidson is soon to launch it’s first production electric motorcycle….called the LIVE WIRE model! Am dead serious! 🙂

Might work on mostly straight roads, but just think how quickly power will be drained in mountain passes etc.
How much did it cost and materials, to make the electricity to recharge the car?

It will actually handle mountain passes much better than internal combustion engine cars since electric motors have a amazing torque curve, in fact, EV’s actually also have higher range with city driving than highway driving unlike conventional cars, also if you happen to hit the downhill on the mountain you can use regenative breaking to put power back in your car 🙂

Agree PJJ. I understand EV’s best environment is in city traveling, or rat racing through suburbs. On the other hand, constant highway speed is a battery range-killer.

Hence 1 EV (out of a 2-car family) can be practical: the spouse doing mostly the city slog takes the EV, and the spouse doing the long-distance commute (and holiday trips) takes the re…fossil!

Theres a South Park episode about hybrids. That’ll explain everything LOL

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