Volk­swa­gen is de­ter­mined to lead the elec­tric revo­lu­tion

The Weekend Australian - - BUSINESS REVIEW - PHILIP KING

Ger­man car­mak­ers’ vi­sion for the fu­ture

The Frank­furt mo­tor show opened this week with the Ger­man car in­dus­try fac­ing a cri­sis of con­fi­dence de­spite years of boom­ing sales.

Two years af­ter “diesel­gate”, when Volk­swa­gen was ex­posed as an emis­sions cheat, the in­dus­try is spend­ing bil­lions to de­velop elec­tric ve­hi­cles in an ef­fort to stave off reg­u­la­tors and re­claim the moral high ground.

An elec­tric car was the star on vir­tu­ally every stand at the show and by the mid­dle of next decade Volk­swa­gen, Mercedes and BMW ex­pect to be sell­ing them in the mil­lions.

Volk­swa­gen upped the ante on its elec­tric plans with “Roadmap E”, which more than dou­bles its pre­vi­ous com­mit­ment with a pledge to of­fer 80 EVs by 2025 across its port­fo­lio of brands, which in­clude Audi, Skoda, Porsche and Bent­ley.

It has ear­marked more than 20bn for de­vel­op­ment and, in one of the largest pro­cure­ment ten­ders on record, has bud­geted 50bn to source bat­ter­ies.

The goal is to of­fer an elec­tric ver­sion of each of its 300 group mod­els by 2030 and be sell­ing about three mil­lion a year.

Chief ex­ec­u­tive Matthias Mueller said it was vi­tal Volk­swa­gen led the way to an elec­tric fu­ture.

“This is not some vague dec­la­ra­tion of in­tent. It is a strong self-com­mit­ment which, from to­day, be­comes the yard­stick by which we mea­sure our per­for­mance,” he said.

“The trans­for­ma­tion in our in­dus­try is un­stop­pable. And we will lead that trans­for­ma­tion.”

Volk­swa­gen’s show cen­tre­piece was a com­pact bat­tery­pow­ered SUV called ID Crozz, one of a fam­ily of mod­els built on a newly de­vel­oped plat­form with zero-emis­sion ranges up to 600km.

It will reach show­rooms in 2020 along with a Golf-sized car sim­ply called ID, fol­lowed two years later a mod­ern recre­ation of the Kombi badged ID Buzz.

Even­tu­ally, 23 EVs will be of­fered un­der Volk­swa­gen’s own badge.

De­spite be­ing rocked by the emis­sions scan­dal and be­ing forced to pay bil­lions in com­pen­sa­tion, Volk­swa­gen group achieved record sales of 10.3 mil­lion last year, up 4 per cent, putting it ahead of Toy­ota and Gen­eral Mo­tors.

How­ever, there has been a back­lash against diesel en­gines in Europe with many cities con- sider­ing moves to re­strict them in­clud­ing Stuttgart, the home of Mercedes and Porsche.

In Europe, the home of “clean diesel”, sales have dived and diesel en­gines are now fit­ted to fewer than half of new pas­sen­ger cars, down from 56 per cent five years ago.

Against that, de­mand for al­ter­na­tives in­clud­ing hy­brids and EV is up al­most 60 per cent over the first half of this year, al­beit from a low base.

Bri­tain and France have declared a ban on cars that rely purely on com­bus­tion en­gines by 2040 and the world’s big­gest ve­hi­cle mar­ket, China, is con­sid­er­ing sim­i­lar ac­tion.

Mercedes-Benz chief Di­eter Zetsche said moves to ban par­tic­u­lar driv­e­lines were miss­ing the point and diesel re­mained vi­tal for the fu­ture.

“It’s worth­while to im­prove mod­ern diesel en­gines rather than ban them,” he said. “We need diesel if we are to achieve our cli­mate tar­gets through less CO2 in road traf­fic.”

But he said there had been “a loss of trust in the Ger­man car in­dus­try’s power of in­no­va­tion and sus­tain­abil­ity. And I re­gret that very much.”

For­tu­nately, Daim­ler, maker of Mercedes, was in a strong po­si­tion to in­vest “mas­sively into our fu­ture” thanks to the strength of its core busi­ness.

Mercedes re­claimed top spot in the global pre­mium mar­ket last year with sales up 12 per cent to 2.2 mil­lion, and has com­mit­ted 10bn to de­velop bat­tery cars with the goal of more than 50 elec­tri­fied ve­hi­cles by 2022.

They will in­clude all ver­sions of its Smart city run­about, which will be the first brand to go solely elec­tric and will also spear­head the com­pany’s move into au­ton­o­mous car-shar­ing.

Un­der its own badge, Mercedes launched an elec­tric sub­brand called EQ at the Paris mo­tor show 12 months ago and cen­tre-stage at Frank­furt was the sec­ond car in that fam­ily, EQA.

A stream­lined com­pact, EQA has 60kW/h lithium ion bat­ter­ies, two elec­tric mo­tors with up to 200kW of power and al­lwheel drive. Real world range is 400km and it can be recharged in­duc­tively, by a wall-mounted box or via a rapid recharg­ing sta­tion.

It will be one of 10 pure EVs within five years. First on sale will be the larger EQC, a com­pact SUV, which ar­rives in Aus­tralia in 2019 with a start­ing price above $75,000.

BMW also cel­e­brated record sales in 2016, its sixth year in a row, and de­vel­op­ment chief Klaus Froehlich said it was ac­cel­er­at­ing its EV roll­out in re­sponse to the in­dus­try’s “com­pro­mised” cred­i­bil­ity, which was lead­ing to tighter reg­u­la­tion.

It has set a re­newed tar­get of 25 elec­tri­fied cars by 2025, half of those pure EVs. It will also build flex­i­bil­ity into fu­ture mod­els so that any driv­e­line — com­bus­tion en­gine, plug-in hy­brid or bat­tery — can be fit­ted ac­cord­ing to de­mand.

Its show cen­tre­piece was a study for a mid-size lux­ury four­door with pure elec­tric power, a 600km range and ac­cel­er­a­tion to 100km/h in just 4 sec­onds.

Called i Vi­sion Dy­nam­ics, it will be the third model in BMW’s ef­fi­ciency sub-brand i and is ex­pected to be badged i5 when it reaches show­rooms in 2021.

“With the BMW i Vi­sion Dy­nam­ics we are ... elec­tri­fy­ing the heart of the BMW brand,” said chair­man Har­ald Krüger.

BMW launched i four years ago with the i3 city run­about and i8 plug-in hy­brid sportscar. It ex­pects to sell 100,000 elec­tri­fied ve­hi­cles this year.

‘We are elec­tri­fy­ing the heart of the BMW brand’ HAR­ALD KRÜGER BMW CHAIR­MAN

Lis­ten. Can we all take a cold shower? Se­ri­ously.

Au­ton­o­mous cars, driver­less cars, self-driv­ing cars, robotic cars, cars where you sit there hav­ing a tinny and a smoke while the metal nav­i­gates the free­way, busy city roads and parks are of the same mag­ni­tude of delu­sion as Y2K, killer bees, the moon land­ing and tax cuts from politi­cians.

Think about it this way. Avi­a­tion is a tril­lion-dol­lar in­dus­try and that doesn’t in­clude de­fence and space ex­plo­ration. It has the high­est stan­dards of en­gi­neer­ing in the world out­side med­i­cal re­search. Yet af­ter 234 years and tril­lions of dol­lars the avi­a­tion in­dus­try hasn’t de­vel­oped an au­topi­lot that you can leave alone. In Oc­to­ber 2008, QF72 Cap­tain Kevin Sul­li­van was cruis­ing along at 37,000 feet on a trip from Sin­ga­pore to Perth when the Air­bus A330-300’s au­topi­lot de­cided to dis­con­nect and the plane dropped nearly 213 me­tres and 119 peo­ple on board were in­jured. Ask any com­mer­cial pilot, au­topi­lot prob­lems are a weekly event.

Some com­men­ta­tors blame pilot inat­ten­tion and some­times that’s right. But in many cases, in­clud­ing the QF72 episode, the pilot was right on top of things; the prob­lem was the tech­nol­ogy. The bot­tom line is every now and then the au­topi­lot doesn’t work.

Now if the avi­a­tion in­dus­try can’t make an au­ton­o­mous plane, would you trust our friends in the auto in­dus­try to make an au­ton­o­mous car you’d feel safe putting your kids in?

For a start, last year au­tomak­ers re­called 53.2 mil­lion cars in the US alone for me­chan­i­cal and tech­no­log­i­cal prob­lems. Airbag man­u­fac­turer, Takata, pleaded guilty to a felony charge as part of a $US1 bil­lion deal af­ter its airbags had a habit of ex­plod­ing shoot­ing shrap­nel into happy pas­sen­gers.

Then there’s the mat­ter of trust. So far VW, Audi, Fiat Chrysler, Re­nault, Mercedes-Benz, Honda, Mazda and Mit­subishi have been caught up in the diesel­gate scan­dal.

Be­fore you say, “well, the min­ing in­dus­try has driver­less trucks”, be aware the big min­ers don’t let them loose on the Great North­ern Highway or send them on a beer run to the Kar­ratha In­ter­na­tional Ho­tel (which I rate as five star be­cause it has a top pool, Wi-Fi, laun­dry ser­vice and al fresco din­ing) and they have re­mote driv­ers keep­ing ea­gle eyes on them.

As Con­sumer Re­ports said ear­lier this year: “Volk­swa­gen lied to us. Its 11 mil­lion ‘clean diesel’ cars have been pol­lut­ing the air at up to 40 times the fed­eral stan­dard for years. Worse: It in­stalled tech­nol­ogy to hide the prob­lem from emis­sions tests.”

I think you should read any re­ports on driver­less cars as mean­ing “maybe we’ll make them work in 20 years or maybe we won’t”.

How­ever, I am grudg­ingly pre­pared elec­tric cars might catch on given this is their sec­ond com­ing. They were first in­vented 185 years ago. But I don’t buy the green ar­gu­ment. Elec­tric cars just shift the en­vi­ron­men­tal dam­age around, and don’t ask about re­sale prices.

In more bad news, last month the Bank of Eng­land warned of a pos­si­ble mas­sive and even big­ger than mas­sive credit crunch be­cause car­mak­ers are fi­nanc­ing their own cars and in­creas­ingly they’re us­ing a rental scheme called Per­sonal Con­tract Pur­chase plans. Ba­si­cally, you rent the car for three or four years then ei­ther re­turn it or buy it for a spec­i­fied price. The Con­ver­sa­tion UK com­pares the PCP crunch to the US mort­gage crunch. Last year in Bri­tain alone, $US7.1bn of auto loan se­cu­ri­ties were sliced and diced up and pack­aged into as­set­backed se­cu­ri­ties. Most new car buy­ers are not told about other less prof­itable and less com­mis­sion-friendly op­tions.

In equally bad news, Hagerty, the lead­ing clas­sic car in­surer, has just re­leased its lat­est clas­sic ve­hi­cle rat­ing and two-thirds of the ve­hi­cles in the Top 25 rank­ing are trucks or SUVs, and nearly 90 per cent of them are val­ued at $20,000 or less.

Hagerty’s Jesse Pi­larski blames Mil­len­ni­als and Gen-Xers. I blame them too for global warm­ing, child poverty and the mess we’re in.

“We’re see­ing the most in­ter­est in the en­try-level mar­ket, and sev­eral factors play into that. Rare and de­sir­able cars like Fer­rari 275s, Mercedes-Benz 300SLs, and air-cooled Porsche 911s saw huge in­creases in value over the last five years, but now that val­ues aren’t ris­ing like they were, in­ter­est has started to wane. Most buy­ers aren’t wor­ried about losing $2000 on a $20,000 pur­chase, but $20,000 on a $200,000 car? That’s a dif­fer­ent story. Also, the stock­mar­ket has been per­form­ing well rel­a­tive to car val­ues, which may have pulled some of the in­ter­est away from those high-end ve­hi­cles.”

And there are some crook­look­ing pieces of metal at the top. The 1973-1987 Chev C/K Pickup, the 1945-1968 Dodge Power Wagon and the 1976-1986 Jeep. For­tu­nately there are some sane Amer­i­cans.

Also on the list are the Pon­tiac Fire­bird, the Toy­ota Supra (very good buy­ing in Aus­tralia) and the 2000-03 Honda S2000. You’ll pay the same here (around $40,000) for a Con­cours qual­ity Honda S2000. Don’t pay more than $20,000 for a good one. But I think they are a good bet. Then again, I was the one that knocked back a Ford XY GT at $65,000. Shan­nons sold it last month for $210,000.

OK. There’s been a lot of com­plaints re­cently about this col­umn sink­ing to new lows and pan­der­ing to the low­est com­mon de­nom­i­na­tor. And they’re right. But the editor (yes, the same one who likes mo­tor­bikes) has told me to go more up­mar­ket. So, on Sun­day I’ll see you at the Moss­green Mel­bourne con­tem­po­rary art auc­tion. I’ll be bid­ding on Ji­tish Kal­lat’s Col­li­don­thus, which is the skele­tal frame of a car made of ar­ti­fi­cial mixed me­dia. It rep­re­sents Jit’s con­cern about the role of the car as a con­stant and an­i­mate force in the ur­ban streets of India. (You don’t se­ri­ously think I know what I am talk­ing about, do you?) Yours for a Ford XY GT.


vi­sion EQ Fortwo’ con­cept car; BMW’s i3 elec­tric ve­hi­cle

Clock­wise from top: a Volk­swa­gen ID Buzz; a ‘Smart


Volk­swa­gen’s Her­bert Diess presents an ID Crozz

Ji­tish Kal­lat’s Col­li­don­thus at Moss­green art auc­tion

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