Government Subsidies Keep Electric Car Sales Afloat In Europe

Author

Neil Winton, Contributor

November 13, 2015

Electric car sales in Western Europe are being kept alive by government subsidies and will quickly fall away again when tax-payer funding dries up.

The failings of electric cars are well rehearsed – too expensive, too inflexible to provide effective all-round transport – but that doesn’t stop manufacturers bragging about how theoretically successful they are becoming.

According to latest data from the European Car Manufacturers Association (known by its acronym in French ACEA) – electric car sales in Western Europe accelerated by a strong 77.2 per cent in the first half of 2015. So far; so impressive. But the totals – 72,201 versus 40,746 in the same period of 2014, show a pitifully small market share.

Total car sales in Western Europe in the first half of this year totalled 6.4 million.

And according to European newsletter Automotive Industry Data (AID), if you peer behind the numbers, some interesting anomalies appear, showing that the electric car market is subsidy driven.

AID editor Peter Schmidt said his data shows the Renault Zoe battery-powered car, with sales of 8,320, is racing for the lead in Western Europe and finished the half year just behind long-time market leader the Nissan Leaf’s 8,540. Renault sold 2,380 Zoes in June – 1,482 in its French home-market – but benefitted from an eye-watering 10,000 euro ($11,000) French government subsidy. The government will give this subsidy – now being called “Le Super Bonus” to anyone handing in a 14-years or older diesel car for an electric one. There’s a smaller subsidy – up to 6,300 euros ($,6,900)  - for anyone buying an electric car.  He predicts that the Zoe will be the biggest seller in all of 2015 too.

Schmidt said this powerful surge in electric car sales is not soundly based.

“This increase is purely artificial. It does not reflect rising or hotter consumer interest. In France it is due entirely to the one off special factor and when these incentives drop again, the market will die as quickly as it exploded,” Schmidt said in an interview.

AID figures showed the Tesla Model S was in third place at 7,220 in the first half, followed by the Volkswagen E Golf, 6,010, and the BMW i3 with 4,360. The BMW i3 is not strictly a battery-only car because it is often sold with a little gasoline range extender engine.

Schmidt said although the future for battery only cars looks poor, the prospects for hybrids and plug-in hybrids looks much more exciting. Hybrids combine a gasoline and electric motor to produce economical motoring, with a bare minimum of electric-only driving. The electricity is generated by the car’s gasoline engine and motion.  Plug-in hybrids have bigger batteries as well as a gasoline engine, and allow battery-only mobility of around 30 miles. The battery can be recharged independently. Both types of hybrid avoid the curse of range anxiety, with much more range than electric cars which often need hours to replenish.

Schmidt broadly agrees with IHS Automotive’s forecasts that battery-only cars will account for one per cent of global sales by 2020, creeping up to 1.5 per cent by 2025. IHS Automotive says hybrids and plug-in hybrids will rise to seven per cent globally in 2020, and accelerate to 16 per cent in 2025.

Long-term, fuel cell powered cars will dominate.

“I agree that hybrids and plug-in hybrids win. They will be the winners in the alternative power-train game. But for the long-term future – 2025 onwards – I see, given the necessary investment in infrastructure, fuel cell powered cars. Batteries are a huge handicap. The cost, the increasing amount of energy for cooling, they cannibalize themselves wasting electric power to keep cool, the weight and range anxiety and the time to recharge. You don’t have this with hydrogen and they have the range of gasoline and diesel cars. That’s why Toyota has given the electric car a miss. They (Toyota) evidently believe in hydrogen,” Schmidt said.

The Toyota Mirai hydrogen powered car goes on sale in California this fall.

Most European countries offered fat subsidies for electric cars, with one notable exception, Germany, Europe’s biggest car market.

German politicians have also boasted that there will be one million electric cars on their roads by 2020. Last year there were less than 20,000 electric cars in Germany.

Will Germany use subsidies to meet this target?

“No. Never say never, but I have a very strong feeling that there is no stomach for electric car subsidies among German parliamentarians. They feel that this would benefit the rich who don’t need a subsidy anyway. I think it is virtually impossible to get such a measure through the German parliament. I think Germany will be lucky to see 250,000 electric cars by 2020,” Schmidt said.

Schmidt said most big car manufacturers have prepared the ground for entering the battery-only market, but are holding back hoping for true demand to appear.

“I think it is next to impossible to make any money selling electric cars. The only way to sell them is to place a huge wodge of cash in the glove compartment. It’s all about incentives, incentives, incentives. The minute they go, the market dies,” Schmidt said.

This article was written by Neil Winton from Forbes and was legally licensed through the NewsCred publisher network.

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