At last week’s Frankfurt International Auto Show, the major German car manufacturers including Daimler, BMW and Volkswagen all demonstrated their latest models and importantly, their efforts in electric vehicles.

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Mercedes debuted an electric hatchback, Audi showed of its new Aicon electric vehicle (as a potential Tesla Model 3 competitor) and Volkswagen showed off its ID Crozz electric SUV model.

While some of the mainstream attention was focused on Ferrari’s new Portofino model, Bugatti’s €2.4 million Chiron supercar or Mercedes’ €2.0 million AMG Project One hybrid car, there was an underlying sense that this year’s show was a pivotal moment in the German car industry as diesel cars begin being phased out in favour of electric vehicles.

German carmakers have been traditionally reliant on diesel engines to fuel their growth in Europe but beginning with the Volkswagen’s diesel-emissions scandal in 2015, car manufacturers are facing increasing scrutiny and pressure from stricter emissions laws that will continue to tighten over the next decade. For example, cities such Paris, Madrid and Mexico City have plans to ban diesel vehicles from their roads by 2025 and countries such as the U.K. and France are planning on bans to combustion-engine models by 2040. Even China is currently working on a timetable to ban such engines.

Faced with this, car manufacturers are accelerating plans for electric vehicle launches as it faces a new world in car manufacturing, which would see electric vehicles account for 3 million units or 3% of global demand by 2025, compared to less than 1% today.

Daimler has pledged to release its first series-produced model for its EQ electric brand by 2020 and hopes to introduce 10 new electric models by around 2020. With plans to invest €1 billion in battery technology, Daimler is aiming to have 25% of its sales from electric cars by 2025.

 

About Kevin Hua

Kevin Hua is a Co-Founder of AtlasTrend, an online investment platform that makes it easy for anyone to learn and invest in trends transforming our world. Kevin has over 19 years experience in financial markets including as Senior Portfolio Manager at Atrium Investment Management and Stark Investments.