Market News

 September 10, 2013
Volkswagen looks at developing 40 alternative-drive autos.

 Volkswagen AG (VOW), Europe's biggest carmaker, outlined ambitious plans to offer as many as 40 electric or hybrid vehicles, betting buyers will have enough confidence in performance to shift to low-emissions cars.

VW will produce 14 models with alternative drive by next year, and will widen the lineup should demand increase, Chief Executive Officer Martin Winterkorn said at the International Motor Show in Frankfurt, where the CEO introduced the e-Up! electric car and a battery-powered version of the Golf.

The aggressive move by VW, which is just now bringing out its first alternative-drive vehicles, echoes a broader shift taking place in the industry, with every major carmaker for the first time in Frankfurt showing off electric or hybrid models. When the biannual gathering took place in 2011, only one hall at the show was dedicated to electromobility.

"VW, which two years ago said electric cars were lunacy, yesterday announced they will bring out electrics," said Andy Palmer, Nissan Motor Co.'s executive vice president. "We have been saying this for around four years now, and everyone has been giggling behind our back. It doesn't look so funny anymore."

Still, the newfound enthusiasm for alternative-drive engines hasn't translated into significant sales amid consumers' concerns that powering systems offer only limited distance before a recharge is needed and objections to higher prices.

Missing Target

Nissan and partner Renault SA (RNO), which together are the car industry's largest producer of electric autos, will miss a 2016 deadline of 1.5 million deliveries a year, Carlos Ghosn, the head of both companies, said in early September. Deliveries of battery-powered cars by the French and Japanese manufacturers amounted to just 68,000 vehicles last year.

German buyers registered 435 electric autos out of a market of 214,044 new cars in August, according to the country's Federal Motor Vehicle Office.

To entice buyers, General Motors Co. (GM) is targeting an improvement of at least 20 percent for the electric-only range of the Chevrolet Volt hybrid, CEO Dan Akerson said in August.

"The electric car cannot be a compromise on wheels," Winterkorn said at yesterday's briefing. "It must convince customers in every respect." Plug-in hybrids, which can switch between rechargable battery power and conventional combustion engines, will have the "greatest market potential."


The e-Up!, which goes on sale in October for 26,900 euros ($35,700) in Germany, is "deliberately positioned" against the battery-powered i3 city car that Bayerische Motoren Werke AG (BMW) is bringing out, Rudolf Krebs, head of electric-powertrain technology at Wolfsburg, Germany-based VW, said on Sept. 4.

"VW has shown us that they always deliver what they commit to," Gian Primo Quagliano, head of automotive-research company CSP in Bologna, Italy, said by phone. "When the technological conditions improve, especially in electric batteries, that market can boom."

BMW, the world's biggest luxury-vehicle manufacturer, is presenting the i3 at the Frankfurt show, which is open to the public Sept. 14 through Sept. 22 following days for press briefings and supplier meetings. The model, priced at 34,950 euros, will enter showrooms in Germany in November.

With the i3, "we are setting new technological standards for the industry," BMW CEO Norbert Reithofer said at a Frankfurt press conference late yesterday.

BMW Hybrids

BMW's i8 hybrid electric-gasoline sports car is also making its debut at the event. The model will be priced starting at $135,925, including destination and handling, when it goes on sale in the U.S. in early 2014, the Munich-based company said today in a statement. BMW is also showing a plug-in hybrid version of the X5 sport-utility vehicle.

Plug-in hybrids have the most potential and BMW plans to eventually offer one in every model line, Herbert Diess, the automaker's development chief, said in an interview.

Cars with electromobility will make up 5 percent to 10 percent of the overall market by 2020 from well under 1 percent now, Diess said.

Other alternative-drive vehicles shown in Frankfurt include an all-electric Mercedes-Benz B-Class crossover from Daimler AG (DAI) that will use a drivetrain supplied by Tesla Motors Inc. (TSLA), and a hybrid coupe prototype from Volvo Car Group.