Germany has recently announced plans to enter the electromobility era; these plans have been  criticized as “too little, too late.” The German Federal Ministries of the Economy, Education, Transport, and the Environment jointly announced that they would plug €500m into a National Electromobility Development Plan, with the aim of becoming the world’s leading market for electromobility and putting a million electric cars on the country’s roads by 2020. But is this a large enough investment for an international competition in electromobility?

Industry observers suggest that this attempt to overtake markets like the US and China, which have already deployed massive means, is bound to fail.

The current initiative springs from a fear that hi-tech Germany, with its reliance on exports, may be left behind in the race for dominance in this domain. Germany has always been a leading player with a strong position in the global automobile market in the past. This, tied in with the country’s high population density, mean the country has strong potential, particularly in areas with high population density, according to a report by research firm IDTechEx.

But according to those close to the issue, the German government’s support is hardly worth mentioning. Almut Gaude of sustainable mobility lobby Verkehrsclub Deutschland (VCD) considers the state’s investment in electric cars as just “a fig-leaf for car makers.” Germany has recently invested €5bn – ten times as much – in its “cash for clunkers” program to help sell new internal-combustion engine cars.

What the German Plan Entails

The money will go towards the development of new batteries, building networks between the industries involved, the construction of charging stations and the upgrading of plugs, as well as into building competence, production and marketing for electric cars. Energy suppliers, municipal utilities, information and communication technology providers and research firms will also profit from these measures.

In the meantime, several projects have started, like the research project into the production of heavy-duty lithium-ion batteries for electromobility, launched with €59m in funding from the Ministry for Education and Research.  The firms Evonic Litarion, Li-Tec, Daimler and Deutsche Accumotive have formed a consortium to produce an initial series of mass-produced lithium-ion batteries, and the German government hopes to halve the price of batteries, which currently stands at between  €10,000 and €15,000. The goal is to have one million electric vehicles on the roads by 2020.

Field tests, subsidized by the Ministry of Transport with €115m, are held in the eight German regions. In Berlin, automobile manufacturer Daimler and energy supplier RWE are developing the components necessary for efficient use of vehicles driven by electric batteries – from drive engineering to an infrastructure convenient for customers. RWE plans to set up a total of 500 charging stations in Berlin by 2012, take responsibility for billing infrastructure, and operate the system. Daimler will provide a fleet with a total of 100 electric Smart cars, with its subsidiary Mercedes-Benz supplying lithium-ion battery technology.

Their competitors Vattenfall and BMW are working on a comparable project in Munich, but will also participate in Berlin. BMW is testing an electric Mini, while Vattenfall is to provide charging stations and billing infrastructure, in addition to operating the system.

Germany also wants to take the lead  in creating a standardized charging station infrastructure throughout Europe, in order to avoid future trouble when international travel in electric cars becomes a reality. The government will invest €100m in this, with the industrial partners adding another €40m.

This element is of the utmost urgency, as electric car charging networks are beginning to be implemented  in other countries around the world, and have not waited for Germany’s input. The most publicized pilot project in this domain is entrepreneur Shai Agassi's Better Place, in partnership with car manufacturers Renault-Nissan. In Israel – the size of German Bundesland Hessen, for example – he is putting together a comprehensive infrastructure with government assistance. Better Place has also signed contracts to roll out charging station networks in Denmark, The Netherlands, California, Japan, Hawaii and Australia. According to a report in German news magazine Spiegel, the company is also preparing to launch  in Germany.

Further down the road, the German Electromobility Development Plan will join forces with the European Commission's Green Cars Initiative, which will be implemented next year as a public-private partnership between the EU Commission and industry, with loans from the European Investment Bank.

However, only €15m has been earmarked for marketing electric cars. Additionally, Germany has no plans to subsidize the purchase of environmentally friendly vehicles as is the case in the US, France, China and Japan.

Whether the dynamics brought into position actually come to fruition depends first of all on technological breakthroughs. According to the government's estimate, research, optimization and networking are needed at various places in the value chain, especially in the key technology of battery storage.

Dr. Werner Schnappauf of the German Federation of Industry (BDI) says: "The German government has to press forward with the expansion of the infrastructure and with international standards and norms for electromobility, as well as providing productive incentives for the introduction of electric vehicles onto the market."

European Comparisons

Compared with other European countries, the German development plan looks unassuming. Spain has pledged to put a million electric cars on its roads by 2014, while Portugal is planning Europe's first national recharging network for electric cars. The British government is projecting subsidies amounting to £5,000/€5,700 to help consumers buy electric cars. France is investing €400m in R&D for hybrid and electric cars, and also plans a €5,000 subsidy for the purchase of cars emitting less than 60 grams of CO2 per kilometer, according to the EU information portal Euractiv.com.

China Gets Ready to Leap

The Western manufacturers' technological head start with internal combustion engines is hard to catch up with – as the Chinese have realized. Therefore, the Chinese automobile industry has abandoned the further development of combustion engines and is aiming to become a leader in electric and hybrid vehicle technologies, according to the Powertrain 2020 study compiled by the business consulting firm Roland Berger.

At the beginning of 2009, the Chinese government accepted a plan to make China the world market leader in the production of vehicles partially and entirely driven with electric energy within three years. China is focusing on tax incentives and investments. Technological innovations for efficient drive engineering are being subsidized with the equivalent of €1.46bn annually, which will increase to €2bn in 2011, in addition to promotional programs for more than ten pilot regions with some 10,000 vehicles.

Already, taxi firms that switch to an electric car get US$8,800 in subsidies. According to the Powertrain study, electric cars will already represent 50% of the automobiles sold in China in 2020.

The Chinese car manufacturers also have the advantage that such raw materials as lithium and neodymium, which are necessary for batteries and electric motors, are mined in China and are thus available cheaply. Low labor costs and major production capacities also make it possible to offer Chinese models at cheaper prices than those of other manufacturers. The US knows this full well – and its own promotional program could catapult electric cars out of their niche into the mass segment.

The US: From Zero to 100 In…

US public investment in electromobility is expected to total $2.4bn/€1.7bn, with the aim of putting nearly a million electric and hybrid cars on the country’s roads by 2015. President Barack Obama intends to promote a total of 48 separate projects with these funds, from the American Recovery and Investment Act.

The largest part of this sum, $1.5bn dollars, will flow into the development and production of battery systems and their components, which are still in their early stages in the US. Battery manufacturer Johnson Controls, for example, will receive $299m in Recovery Act funding.

Car manufacturers will also receive significant boosts from recovery funds. General Motors will get $241m, mainly for the development of its Chevy Volt gas-electric hybrid, scheduled for launch at the end of 2010. Further subsidies will go to Ford, Chrysler, Delphi, and Nissan, among others, as well as to the battery specialists A123 Systems, LG Chemical and Saft. The US will support the purchase of electric cars with up to $7500 in tax exemptions.

The global race is on to lead the future growth of electromobility, and Germany is off to a poor start. The German government has given its industries no more than chutzpah as provision for the road. Even after the federal elections in Fall last year and the Electromobility summit with Chancellor Angela Merkel in May this year, nothing has changed. If the government doesn’t intensify its efforts, the Electromobility Development Plan will remain no more than a futile attempt to catch up with the rest of the world.

Download German National Development Plan Electromobility

Dorothee Baxmann