E- Cars: Bottlenecks are Increasingly Eliminated

Dear Shareholders,

In discussing electric cars, three criticisms tend to come up: the range is too short, the acquisition cost is too high and there are too few charging stations. Today, the “all-clear” can increasingly be given on each of these criticisms. At the end of the year, for example, Volkswagen’s all-electric compact car, the exact name of which has not yet been released, will go into production. The first car, originally developed by VW as a “Stromer,” will have a range of up to 600 kilometres (375 miles). The mid-range Model 3 from Tesla will travel more than 500 kilometres (315 miles) before you have to drive to a charging station.

At the same time, sticker prices (acquisition costs) are falling – e-cars are becoming affordable. In the USA, the basic version of the Model 3 is already available for $37,000 (33,000€). In Europe, the cheapest variant is expected to be on the market in about half a year. VW even plans to offer its compact car for only around 30,000€ ($33,600). In Germany, for example, there is a purchase premium of 4,000€ ($4,480). The bottom line is that VW’s electric compact car is no more expensive than a comparable Golf Diesel. However, it should perform significantly better in terms of vehicle characteristics such as acceleration and available space.

Beijing Changes Subsidy Policy

Let’s come to the last bottleneck that still exists: the charging stations. On this point, too, China could once again prove to be a pacemaker. The People’s Republic wants to change the promotion of electromobility. In the future, the government will no longer subsidize the purchase of e-cars so heavily, but rather the construction of charging stations. Beijing, for example, is cutting subsidies for purely electric cars with a range of at least 400 kilometers by half to 25,000 RMB, which corresponds to about 3,250€ or $3,700.

By the end of 2017, Beijing had already set itself the goal of increasing the number of charging points from 200,000 to 4.8 million by 2020 with government support. Then, according to forecasts, one charging point would be calculated for each pure electric or plug-in hybrid car. Experts expected necessary investments of the equivalent of 16€ billion ($18 billion).

Other countries are now also starting to move: the German Transport Minister, Andreas Scheuer, wants to support the construction of private charging stations with a total of 1€ billion. That seems like a smart idea: according to the Ministry, 75-80% of owners of e-cars charge them at home or at work.

Shop and Load

At the same time, retailers see charging points as an effective instrument to win new customers or retain existing ones. As early as 2015, Aldi began equipping its supermarkets with charging stations. Later, the German food discounter began to “electrify” locations, particularly those near motorways. This is intended, for example, to attract holidaymakers. One thing is clear: motorists who currently have to wait around 30 minutes before their e-car is recharged are likely to go shopping in the meantime. By the way, competitor Lidl followed suit.

In addition to subsidies and customer loyalty measures, new technologies should also support the expansion of the store network. For example, a Berlin start-up has developed a hardware and software solution that can be used to turn street lamps into charging points. There would be an additional kick if the corresponding lanterns were converted to LEDs, which consume around 90% less electricity than conventional light sources. The energy saved could then flow into the Stromer. After all, VW wants to develop mobile charging stations that can be flexibly positioned where current demand is greatest – for example at mass events such as football matches or music concerts.