Can Germany dominate the electric vehicle industry?
By: Dr Peter Wells, Monday, August 24, 2009, AutomotiveWorld.com
On August 19th the German government approved a plan to make available €500m (US$712m) of public funding to create an electric vehicle recharging infrastructure and to support battery R&D. It is reported that €115m (US$164m) will be used to establish eight test regions to evaluate how electric vehicles might be introduced. €170m (US$242m) is apparently designated for battery research, with the aim of making domestic German production a priority and ensuring that German engineers are fully trained in new battery technology. Indeed, the money is due to be spent by 2011, suggestive almost of a panic measure. The Minister for the Economy spoke in terms of achieving a market of one million cars by 2020, and for five million cars by 2030, or approximately 10% of the existing car fleet.
The question is really, will it work? While at first glance this is a substantial investment the problem may be that it is already too little too late. The following considerations are of importance:
- Thus far, there is no announcement on providing incentives for consumers to buy electric vehicles whereas the UK has outlined a programme to provide up to £5,000 (US$8,272) in 2011 (although some form of initial incentive is still likely);
- Other governments have come up with more resources. The United States, for example, is putting US$2.4bn in Federal grants to develop next-generation electric vehicles and batteries;
- The initiative is dwarfed by the €5bn spent by the German government to underwrite the scrapping incentive scheme, thereby providing support for the traditional petrol and diesel cars;
- The German vehicle manufacturers appear to be well behind their main competitors including of course Renault-Nissan (Leaf), General Motors (Volt), Mitsubishi (i-MiEV) and the hybrid offerings of Toyota and Honda. New entrants such as BYD from China appear ready to bring product to market by 2010;
- There is no 'kick-start' arrangement of the sort championed by Project Better Place to achieve a swift transition to mass electric vehicle ownership of the sort that can be achieved in smaller countries like Denmark, Israel and Australia.
Of course, Daimler has its links with Tesla and an electric version of the smart. Similarly, BMW has made considerable progress with electric versions of the Mini, and can be expected to put more behind their electric vehicle efforts and may bring out a sub-brand under which to market them.
Rather belatedly then, Germany has come to see the threat to its mainstream industry from the sudden burgeoning of interest in electric vehicles. Even with fantastic technical resources and a skilled workforce beyond compare, it is not immediately obvious that the German automotive industry can wrest the initiative back. Attempts elsewhere to nurture such a focus on the environmental pressures have not always been successful - an interesting example is the Thailand Eco-car programme that sought to position the country as a global hub for low-CO2 cars and which has struggled to live up to expectations.
In short, €500m is not enough.
Dr Peter Wells is a Reader at Cardiff Business School, where he is a Co-Director of the Centre for Automotive Industry Research and leads the automotive industry research programme within BRASS, also in Cardiff University. Dr Wells is also a director of AutomotiveWorld.com's sister website AWPresenter.com. He can be contacted on wellspe@cardiff.ac.uk.
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
Published on Monday, August 24, 2009
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