Germany to ‘fall short’ of electric car target – or not

According to the German news site TheLocal.de, Germany is to ‘fall short’ of their electric car target of one million vehicle sales by 2020.

Based on another article published by German language newspaper Sueddeutsche, the headline is in response to a recent study by the Fraunhofer Institute for Systems and Innovation Research (ISI): “Market launch scenarios for electric vehicles”.

“The market launch of electric cars depends, among other things, on how external factors of influence develop such as the price of crude oil or electricity. Besides these cost developments, the range of vehicles offered and the degree of acceptance of this new type of mobility will also be decisive. Under optimistic assumptions, the joint goal of the German government and the German National Platform for Electric Mobility of one million electric cars by 2020 can be reached without monetary measures. And even under less optimistic framework conditions, it should be possible to get 150,000 to 200,000 electric cars on Germany’s roads by 2020.”

The study looked at the likelihood of reaching the German 1 million EVs by 2020, taking in to account various scenarios including changes over time in fossil fuel pump-prices, battery costs, electricity costs and other forecast variables.

The best scenario is that prices of batteries and electricity drop, while fuel becomes more expensive. With that scenario the ISI believe that the target of one million could be reached, even without incentives.

But if electricity prices rise and batteries don’t become cheaper then sales in the next 7 years could be as low as 150,000 to 200,000 EVs on German roads: The million target would be missed by some margin.

Apparently when the physicist leading the study spoke to German Chancellor Angela Merkel at the Frankfurt Auto Show, he declared to achieve the goal “is going to be a steep uphill climb”.

“skeptics are not really familiar with the exponential function and believed only in a straight, slow changes in prices, hence believe that EVs are much more expensive than conventional cars, usually have a small range, and there is still no comprehensive network of charging stations. Therefore, they are anything but self-perpetuating”.

Most experts agree that Government support is required, but there is a political reluctance to subsidize or offer incentives at the point of [EV] purchase – like to the schemes offered in the UK and the US, but the study indicates that Government help is needed.

Head of Germany’s National Electric Mobility Platform Henning Kagermann has recommended government support via less direct means, such as dedicated EV-only parking, tax advantages for company vehicles (business owners) and support for fleet buyers, ending with “without government assistance it can not go”.

Certainly the fleets and businesses would be an easier win in principle, because they are the volume buyers. Volume is key, because volume sales should help to lower costs and increase consumer interests, plus the companies buying EVs will also look at installing charge points, making EV range concerns less of a problem, etc…

The point of the 1 million target is to drive the EV industry forward: Germany’s massive economy is based on manufacturing output, the biggest of which is cars. They cannot afford to fall further behind economic competitors in Asia.

Summary of the report:

The successful market launch of electric cars will basically be determined by how economical they are compared to conventional vehicles. For electric cars to be more economical than conventional ones, they have to be driven a lot so that their lower operating and maintenance costs amortize their higher purchase cost. At low annual mileages, gasoline-fuelled internal combustion engines will continue to dominate the market in the future as will diesel engines at very high annual mileages. In-between, the decision depends heavily on whether sufficient electric driving shares can be realized based on driving behavior. Electric cars make the most economic sense with relatively uniform daily driving cycles and sufficient annual mileage.

In the private sector, full-time workers living in rural areas and small to medium-sized towns or the suburbs of larger cities are the best match in this regard. These make up about one third of all private car owners. Drivers with garages or private parking spaces, who account for approx. 60 percent of private car owners, are even more attractive than on-street parkers from an economic viewpoint, because of the low charging infrastructure costs – charging can be done over night at home rather than having to rely on public infrastructure.

Purely commercial fleets, which account for about 30 percent of the market for new cars, also have a significant economic potential. The reasons are found in their driving profiles which often feature predictable routes, the specific economic framework conditions such as the elimination of VAT with its positive impact, especially at the higher purchase prices of electric vehicles, and the high relevance of economic efficiency in car purchasing decisions.

The potential of company cars has to be subjected to careful scrutiny. These make up a high share of new car sales, especially in the executive car segment. In the past, the main reason for the lack of attractiveness of electric cars was the necessity to pay tax on the listed vehicle price. Even though this drawback has been removed by a change in the law, the driving profiles in this sector are often characterized by irregular daily trips. This leads to low shares of electrical driving and thus smaller economic potentials. However, further analyses are necessary of this car segment.

For Professor Martin Wietschel it is clear that: “The focus should be on the commercial sector when considering possible options for supporting the market introduction of electric vehicles. Because commercial vehicles frequently end up on the market for private cars, this segment represents an important doorway to the wider diffusion of electric cars. Different policy measures such as the introduction of special tax depreciation options could accelerate the market start-up here”.

If the market launch is differentiated by the various electrical drive systems, the study concludes that vehicles with range extenders and plug-in hybrids with an additional conventional engine could achieve larger market shares than battery-electric cars in the near future (approx. three quarters). The drivers for whom these vehicles make the most economic sense usually have electrical driving shares of more than 80 percent.

According to the study, there are still significant uncertainties concerning the assumptions about the willingness to pay more for an electric car than for a conventional one, as well as the readiness to switch to electrically-powered cars in spite of the still limited range of available models. Both have a strong influence on the market launch. The limited choice will be offset to some extent in the coming months, as German car manufacturers have announced the launch of a wider variety of models.

Download the report here: www.isi.fraunhofer.de

View original source story here (German Language): www.sueddeutsche.de

“The Local” story here: Germany to 'fall short' of electric car target – The Local

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