Government failures Carmakers Demand More E-Car Action

The German chancellor wants to have 1 million e-cars on the road by 2020 but poor sales mean that target is looking very ambitious. Carmakers feel the German chancellor has abandoned them.
Electricity ahead.

Shortly before Christmas, Henning Kagermann reported directly to German Chancellor Angela Merkel.

As head of the national e-mobility initiative, the former chief of German software company SAP wanted to explain how it was going — that, in fact, there won’t be anywhere near 1 million e-cars on German roads by 2020, as the chancellor had proclaimed.

“Mister Electrocar” doesn’t want to speak yet of stepping down. But for months, his mood has been sinking as the chancellor fails to announce government help.

Mr. Kagermann also represents the mood at German carmakers BMW, Volkswagen and Daimler. BMW alone has invested more than €3 billion, or about $3.26 billion, in developing its electric car, the i3 − but with hardly any sales in Germany to show for it.

The political will is lacking in Germany, complains BMW’s head of sales and marketing, Ian Robertson. What’s needed, he demands, are government incentives for e-car buyers.

Policymakers say it’s difficult to explain why the car industry, despite earning billions, can’t successfully introduce new products on its own.

Like the rest of the industry, BMW is under pressure. From 2020, new cars will only be allowed to emit a maximum of 95 grams of CO2 per kilometer.

This is where e-mobility is supposed to help in meeting E.U. guidelines, to balance out greater emissions for large sedans.

But so far the government has relied on “market and competition” as “the best driver for innovation.” That has meant “no buyer’s premium” for electric cars, but rather other incentives like being able to drive in the bus lane.

Meantime, the e-car boom has failed to materialize. Even worse, vehicles that emit less than 50 grams of CO2 per kilometer will no longer be exempted from motor vehicle taxes for ten years, but five years instead.

The industry continues to insist on a buyer’s premium.

Working for the German automobile industry association back in May, Munich-based consulting firm Roland Berger determined sales price was the major deciding factor for both private and commercial customers.

With a subsidy of €2,500 per hybrid vehicle, and €5,000 for purely battery-driven vehicles, the goal could just barely be met, the consultant said. The estimated cost by 2020: €4.5 billion.

Budget policymakers for the coalition parties — the center-right Christian Democrats and Christian Social Union, along with the center-left Social Democrats — said no.

Environmental organizations are also fighting what they call “gifts for the car industry” — even if the Greens welcomed campaigning by the economic minister, Sigmar Gabriel, for a buyer’s premium this week. It could “introduce the swing away from oil in traffic,” said Anton Hofreiter, who chairs the Alliance ‘90/ Greens parliamentary group.

The federal transportation minister, Alexander Dobrindt, rejects a buyer’s premium and argues for a special write-off for commercial vehicles.

Members of the coalition, including vice chairman of the CDU/CSU parliamentary group, Ralph Brinkhaus, are also opposed to a buyer’s incentive. “I consider it questionable to overload the tax law with funding objectives,” he said.

Budget and finance policymakers are at best ready to make small concessions. For instance, they might do without taxing the cash value benefit when an employee charges his car at his workplace.

Budget policymaker Norbert Brackmann of CDU stressed: “There is no fresh money.”

The reason, policymakers say, is because it’s difficult to explain why the car industry, despite earning billions, can’t successfully introduce new products on its own.

Other solutions are being discussed. The SPD, for instance, is campaigning for a bonus system — in which a new car that emits more than 95 grams of CO2 per kilometer would be made more expensive, with that added charge used to make e-cars cheaper. In that way, up to €600 million per year could be redistributed.

But the premium car producers, with their luxury-segment vehicles, are fighting this because they’re afraid of subsidizing foreign carmakers.

On Monday, the government and coalition will meet for talks with the chief of staff of the German chancellery, Peter Altmaier. After all, Ms. Merkel wanted to announce on February 5 how her ambitions for e-mobility were going.

Sources inside the coalition say if things get doubtful, she’ll retract the goal of 1 million e-cars by 2020.

 

Daniel Delhaes reports on politics, transport and airlines from Handelsblatt's Berlin office. Markus Fasse covers the aviation and automobile industries. To contact the authors: [email protected][email protected]