The Great E-llusion Germany to Promote Electric Cars with Massive State Aid

The German government wants to promote the development of electric vehicles on a grand scale. But many industry observers point out that the perceived benefits of e-cars are massively overrated. In some cases, their carbon footprint is even worse than that of conventional autos.

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When BMW CEO Norbert Reithofer travels to meet with German Chancellor Angela Merkel next week, he won't be sitting in his usual spot, on the back seat of a chauffeured car. This time Reithofer will be driving an electric Mini Cooper, in which a battery weighing up to 300 kilograms (660 lbs.) will occupy the entire back seat area. Nevertheless, Reithofer's ride will still be more comfortable than that of Daimler CEO Dieter Zetsche. He'll be sitting at the wheel of a tiny Smart which has been converted into an electric vehicle.

But the two CEOs are only too pleased to put up with such inconveniences, as they introduce their companies' latest showcase products: cars with power sockets instead of gasoline tanks.

The chancellor has summoned more than two dozen senior executives, including the managers of energy utilities and technology companies, to a meeting in Berlin next Monday, where they will present the latest advances in the electrification of the automobile. The event is titled: "What needs to be done to finally achieve a breakthrough for the electric car?"

There is great concern that Germany's most important industrial sector could be falling behind internationally when it comes to this technology. Economics Minister Rainer Brüderle calls the electric car a "key technology for Germany as an industrial location," while Transport Minister Peter Ramsauer has already defined the subject as "the most important project of this legislative period." Chancellor Merkel, too, is calling it a "national task."

Lagging Behind

German automakers Daimler, BMW and Volkswagen have been tinkering with battery-driven vehicles for years, but others have already taken the lead worldwide. The most powerful batteries are not made in Germany, but in China and Japan, and Asian automakers have already begun series production of electric cars.

Their German competitors, on the other hand, do not expect to be ready for another two years. And while the federal government recently approved billions for its so-called scrapping premium, a cash-for-clunkers program intended to spur sales of new cars, Washington and Beijing have launched programs worth billions to promote electric vehicles.

But now, at least according to Merkel's plan, Germany is about to catch up with a vengeance. And the auto company CEOs Norbert Reithofer (BMW), Dieter Zetsche (Daimler) and Martin Winterkorn (VW) already know how. They want the government to help them out by introducing uniform standards for battery charging stations, as well as by providing billions in subsidies, first for research and development and later for the buyers of electric cars.

But by making these demands, the auto bosses are raising two important questions: Have they missed the boat on an important development yet again, as they did once before with hybrid engines? And why should the state help pay for their race to catch up with their foreign competitors?

Too Good to Be True

The development would be worrisome if the electric car were in fact capable of doing what politicians expect of it. The government's documents for the auto summit mention the many potential benefits of electric cars: how they will put an end to the sales crisis in the auto industry in one fell swoop, rid the environment of harmful emissions, guarantee mobility in cities and, last but not least, solve the storage problems associated with the production of alternative energy.

The seemingly wondrous properties of the electric car are being touted in Germany and elsewhere. In the United States, it is officially described as a "zero emission vehicle" -- words that reflect a dream too good to be true. Although the electric car has no emissions, the electricity to charge the batteries has to be generated somehow: through solar, wind or hydroelectric power, through nuclear power or in coal power plants. An electric car can be more or less environmentally friendly, depending on what makes up a country's energy mix.

"We have a perception problem," says Bosch CEO Franz Fehrenbach. According to Fehrenbach, if the industry says that a mid-range car will consume only 3 liters of diesel per 100 kilometers (77 mpg) in a few years' time, this generates little enthusiasm. For an electric car, however, "you get a massive round of applause," even though the carbon footprint of the 77-mpg car with an internal combustion engine is "smaller than that of an electric car."

The German Automobile Club (ADAC) has calculated that a Smart with a diesel engine emits 86 grams of carbon dioxide per kilometer driven. An electric Smart with its battery charged with electricity from coal power plants is responsible for 107 grams of CO2 emissions. In other words, its carbon footprint would be bigger, at least in China, where more than 80 percent of electricity is generated in coal power plants. But if the batteries were charged with electricity from sources based on the current German energy mix, the emissions would drop to only 71 grams.

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Norberto_Tyr 04/30/2010
1. Laissez-faire is dead, long live mercantilism !
To be honest, I know very little about electric cars, even about cars in general, but I have a great psychological ailment, when I see an opportunity to connect apparently unconnected issues I can't stop it, I have to jump and make a fool of myself, this happens since my early days at primary school: “Norberto, do you understand what we are talking about?". Well, in my view we are talking about that bad literature usually called economics and its slippery cousin, finances, all tampered by the art of lying, namely politics. Everyone is trying to protect his main business afloat, naturally enough, but, weird though, under the pretence of mythological global interests, the Global Village, the EC, the Mercosur, et cetera. None believe a bit about that, but every one pretend to believe or at least to appear not to be too eager to snap the best sandwich out of the plate. The best sandwich, nowadays, seems to be electric cars for some strange reason, but as the old adage says: “if you strive to go where everyone wants to go, you are doomed to arrive late”. The non-written historical laws and the old Greek mythology prove that obvious solutions are never correct. How much pollution produces the development of non-polluting technologies? Why history would repeat Benz and Ford’s successful economic fairy tales? Is the world sustainable under the premise that every ‘civilized’ country should grow at least 3% per year? Are our governments legally entitled to bet our tax money on futuristic predictions? And finally, are we sure that the cost (considering economic externalities) of producing and distributing electric power and the associated technologies are cheaper than combustion engines? Now be aware, I am going to kick the chessboard, do we need to go around at willy-nilly in our own cars?
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