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Electric cars dominate the Frankfurt Auto Show



FRANKFURT – European carmakers have pledged tens of billions of dollars in developing electric cars and hybrids to meet stricter restrictions on pipeline emissions. Now they face the challenge of selling these vehicles.

Volkswagen
AG

, Porsche too

Daimler
AG

Mercedes-Benz unveiled all electric models at this week's car show in Frankfurt which will soon be available to dealers. Executives said more hybrid and plug-in models were on the way, as part of a broader drive to electrify large parts of their range.

But with prices still high and consumer demand low for electricity, the industry is calling on European governments for help and asking for tax subsidies and legislative incentives to make cars more affordable and appealing to buyers.

"The electric car will not make its way naturally. Incentives will play a big role, ”Volkswagen appears

Herbert Diess

said. The world's largest car manufacturer launched a new fully electric compact car called ID.3 on Tuesday.

Electric car sales in Europe, which have some of the world's toughest emissions requirements, are still anemic. In the first half of this year, all electric vehicles and plug-in hybrid vehicles accounted for only 2.4% of total vehicle sales in the European Union.

Globally, the market for electric cars is also a small niche, but car companies and their parts suppliers say they have no choice but to move most of their research budgets to battery-powered models.

Tougher emission regulations in Europe, China and the United States make it difficult for companies to achieve the targets for reducing air pollution in rear pipes without selling more electrified models. Many car manufacturers have been pouring money into battery technology and developing a network of road chargers to support refueling.

For example, Volkswagen has invested almost $ 1

billion in the Swedish start-up Northvolt AB to build a battery factory in Germany.

Profit from car manufacturers like Daimler and

BMW
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has fluctuated under the weight of the huge investments made in electric cars, but the companies say there is no alternative.

“We have to invest and we are better placed than some to pay the price. Electric cars will not come for free, says BMW's CFO

Nicolas Peter

saying.

Generating an electric car generally costs $ 12,000 more than making a comparable gasoline car and parity will not be achieved in about five years, according to consulting firm McKinsey & Co. The battery alone costs between $ 5,500 and $ 7,700 per vehicle, Volkswagen Mr Diess said.

Without a significant technological breakthrough, car manufacturers recognize that they will need to build volume and economies of scale to help lower prices.

"There is no doubt that we must drive these costs down over the next several years," says Daimler CEO Ola Källenius. "You can't exactly influence what customers will buy." The company's Mercedes brand revealed this week a concept for a fully electric version of its flagship since S class.

The electric cars displayed in Frankfurt this week – which also included a hatchback from

Honda Motor
Co.

and the first hybrid model from Italian supercar manufacturer Lamborghini, one

Audi
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subsidiaries – contrasts sharply with car shows in Detroit and New York earlier this year. At US exhibitions, sports vehicles and pickup trucks took center stage and fewer plug-in models made their debut.

The International Motor Show Germany IAA 2019 has a particular focus on electric cars, such as this Porsche Taycan. [19659028] Image:

RONALD WITTEK / SHUTTERSTOCK / EUROPEAN PRESS PHOTOGRAPHY

A hybrid Lamborghini is displayed at the company's booth. It is the first hybrid car manufactured by the Italian supercar manufacturer.


Photo:

DANIEL ROLAND / AGENCE FRANCE PRESS / GETTY PHOTOS

Volkswagen Electric I.D. Buzz will appear on the media preview day.


Photo:

SASCHA STEINBACH / SHUTTERSTOCK / EUROPEAN PRESS PHOTO AGENCY

While car manufacturers sell more electric models in the United States, many buyers have taken advantage of low gasoline prices and bought large vehicles that consume more fuel rather than less.

Many of the latest electric car models can travel 200 miles or more on a single charge – a huge improvement from several years ago when 100 miles or less was more typical. The new VW ID.3, for example, will offer a range of as much as 550 kilometers, or 342 miles, depending on the battery option.

But even with the extension of reach, potential customers are still afraid to run down the battery on a longer journey and do not have a place to connect. While the situation has improved and new charging station networks are being built in Europe, the steep price of electric vehicles and anxiety related to the battery area are still the biggest obstacles, according to industry leaders and analysts.

Governments in China and the United States already offer great incentives for electric car buyers, but sales of hybrid and plug-in models are still a fraction of total sales there.

Porsche's North American President

Klaus Zellmer

said that the psychological barriers to making the transition from gasoline to electric will not be easy to overcome. The obstacle involves "a whole new technology," he said. The sports car manufacturer this week showed off Taycan, a powerful four-door sedan that only runs on battery power.

This is why the industry is calling on governments to give hands.

Hildegard Wortmann,

Audi's board member responsible for sales said that Europe still has large patches where drivers cannot load their vehicles on the road.

She urged the European governments to follow Norway's example, where incentives such as tax rebates for buyers and free parking have made it the first country to hit a tipping point: More than half of vehicle sales are electric.

"We have to take a look at Norway," Wortmann said. "This really small country has shown the rest of the world how it's done."

Write to William Boston at william.boston@wsj.com and Christina Rogers at christina.rogers@wsj.com

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