German Electric Vehicle Development from the IAA

tendata blogTrade Trends News

ten data blog06-09-2023

At the IAA Mobility trade show in Munich, automakers put their electric cars in the spotlight.

Once a purely automotive trade show, the IAA is now entirely dedicated to sustainable mobility, with the suffix "Mobility", and German manufacturers showed what the car of the future will look like: digital, sustainable and, above all, electric.

Jürgen Pieper of Bankhaus Metzler says: "The electric car was coming anyway, and it's coming with such force that it's impossible to avoid it. And then you'd rather be at the forefront of the new technology instead of always just saying: what a great time that was."

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Federal government's goal: 15 million electric vehicles by 2030

The number of registrations of so-called BEVs (Battery Electric Vehicles), i.e. purely electric vehicles, is also increasing significantly in Germany. According to the Federal Motor Transport Authority, in July 2023, 20 percent of all newly registered cars were electric. However, when looking at the number of registered vehicles, the situation as of July 1 is different, with battery-electric vehicles still the exception on German streets, with 1.17 million, or 2.4 percent.

The federal government wants to change that. The traffic lights want to have at least 15 million purely electric vehicles on German roads by 2030. However, according to calculations by the Center for Automotive Management (CAM), this goal is unattainable; only about seven to eight million electric cars are realistic until then. What's the problem?

In this context, Ferdinand Dudenhöffer, head of the Center for Automotive Research (CAR), blames the "radical funding policy of the Berlin Alliance" and the rapid decline in the purchase premium for electric cars. As of September 1, only private individuals can apply for the "environmental bonus". Companies and individuals will no longer benefit from it. From 2024 onwards, only vehicles with a maximum base price of 45,000 euros will be subsidized. Earlier this year, the responsible Federal Ministry of Economics abolished subsidies for plug-in hybrids. A mistake in Dudenhoeffer's eyes is the hard and fast conclusion that "Harbeck is destroying electric cars in Germany for the German carmakers".

No subsidies for small cars

Criticism of the subsidy has long come from other quarters as well: Light electric vehicles with an empty weight of up to 450 kilograms (excluding batteries) and a maximum output of 15 kilowatts are excluded from the "environmental bonus". Manufacturers of these EU L7e-class "microcars" see a clear competitive disadvantage in Germany compared to larger vehicles.

"Ultimately, we need incentives for smart mobility and incentives to reduce the size of our cars. Lightweight electric cars are ideal for urban mobility, requiring half the parking space and saving a lot of material and CO2 in the production process. Countries like Italy, the Netherlands and Greece promote this." Hans-Peter Kleebinder, chief brand guardian at the Swiss maker of the Microlino, complains that the Microlino is a lightweight car that looks like a modern version of the 1950s BMW Isetta. The Swiss company hopes to join other European manufacturers in touting the smallest electric cars at the IAA and getting subsidized accordingly.

Key point: charging infrastructure

Another building site leading to the future of electric vehicles is the charging infrastructure. According to the Federal Network Agency (Bundesnetzagentur), there were 92,672 public charging points for electric vehicles in Germany as of June 1; however, not even one-fifth of these are fast charging points. The number of charging options will have to increase exponentially over the next few years if the development of charging stations is to keep up with the growth in the number of electric vehicle registrations.But as the automotive industry has repeatedly complained, despite numerous initiatives by energy suppliers and automakers themselves, and the federal government's "master plan," things are moving too slowly.

The government is taking a new step in expanding private charging stations, just in time for the IAA. The Federal Department of Transportation in Volker Wiesing (FDP) has set up a pool of 500 million euros.As of September 26, around €10,000 can be applied for for the construction of charging stations for electric vehicles with new photovoltaic systems and power storage.The KfW development bank is responsible for the processing. However, there are some obstacles: the technology must be purchased from scratch.Requirements include owning your own house and your own electric car.

However, a key point remains: electric cars can only succeed if the charging infrastructure (especially fast charging points) expands.After all, new charging technologies can play a role in this regard - for example, Mercedes-Benz's new CLA promises 400 kilometers of "refueling" in just 15 minutes or so.

Inflation as a brake on electric cars

The list of challenges that need to be overcome in order to achieve widespread success with electric vehicles could go on and on.For example, there is the problem of raw materials for batteries.They are mainly won outside Europe.Against this background, automotive managers have long warned about the dependence on China and are looking to invest in corresponding mines.

The automotive industry says rising prices have also slowed the development of electric cars. Hildegard Müller, chairman of the VDA, the association of the automotive industry that organizes the IAA, explains: "Hyperinflation and worries about the economy - that's what's causing people problems. That's why the purchase of a new car is also given special consideration."

But despite all the temptations, the new technology is actually "destined for success" in Europe - and the timetable is already set. Because: by 2035, no new cars will be allowed to be sold in the EU that use fossil diesel or gasoline.

Will Chinese manufacturers help the breakthrough?

That's another reason why Chinese automakers are targeting the European market.Once a huge sales market and production base for domestic and foreign electric car makers, China is now entering the European market with a wide range of models.Their presence at this year's IAA is more prominent than ever.While international heavyweights such as Toyota were nowhere to be seen on the exhibitor list, Chinese manufacturers such as BYD (Build Your Dreams) showed their ambition at the IAA. The company, which recently became a market leader in China, now hopes to export cars primarily - including to Europe. "The Chinese are coming into Europe.

They are going to be much faster than the Koreans or the Japanese. They are coming at the speed of Tesla, at the speed of China. There is something waiting for us here," predicts automotive expert Dudenhoeffer. It's only a matter of time before a Chinese car factory is built here.

German CEOs are relaxed

Given their newly developed electric cars, German manufacturers are apparently quite relaxed about the Chinese challenge. (Chinese manufacturers) are coming here now, just as we went to China 20 years ago and built plants there," said Oliver Zipse, CEO of BMW. It would be a strong signal to build a factory here." "The conditions here are good and new jobs can be created here as well. I'm relatively relaxed because BMW is always in competition."

Volkswagen boss Oliver Bloom compares it to a sporting competition: "The better the competition, the better I have to be. And the whole thing is always in the interests of the customer." Indeed, buyers of electric cars will benefit from increasing competition. The transition to electric vehicles will accelerate. All that remains is for the state to create the framework conditions to make the shift to electric vehicles attractive so that the mobility breakthrough can succeed.

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