Mentally preparing for an 'armada of EVs'

FRANKFURT — All the new electric vehicles, EV strategies and eye-popping new commitments to EV production that dominated discussion here put some industry leaders in a reflective mood — pondering what it all means, from design to development to how companies will pay for the transformation to electrification.

Still, the one glaring difference in Frankfurt compared with past EV celebrations at auto shows was the sheer number of senior executives who now proclaim to be true believers in their ultimate acceptance.

While electrified vehicles account for a tiny fraction of global auto sales today, few here were heaving those familiar sighs about whether consumers will ever truly want to own battery electrics and plug-in hybrids.

Now automakers sense it, they say, and they see it in their sales numbers.

"I see for the United States a tipping point for electromobility," said Hinrich Woebcken, CEO of Volkswagen Group of America. "Look at all the things happening now with infrastructure coming up and also other car companies entering. There is in our projection definitely a chance of high market share coming after 2025 — picking up from 2020 — for the entire industry. It all comes together."

And the demand, he says, will be genuine, not the result of compliance with government mandates.

"I don't believe that regulatory elements will be the main driver of electromobility," Woebcken said.

In Frankfurt, VW showed the latest iteration of its I.D. Crozz, part of a family of dedicated battery-electrics coming to the U.S. starting in the early 2020s.

"Electromobility in terms of sales numbers did not arrive yet, that's true," he said. "But partly it's because of compromises in terms of range or performance or price. We intend to come to the market at exactly the right point in time, when also the charging infrastructure picks up."

Jaguar Land Rover announced this month that all its vehicles will be electrified after 2020, with similar promises coming recently from Volvo and Aston Martin. JLR followed in Frankfurt by revealing that plug-in hybrid versions of the Range Rover and Range Rover Sport are coming by year end.

"About 18 months ago, the EV discussions among a lot of OEMs were about compliance — CO2 compliance," said Andy Goss, head of global sales for Jaguar Land Rover. "But what's happened in the interim period is that has turned into consumer pull, without a shadow of doubt.

"We see it already on the I-Pace," Goss added, referring to Jaguar's electric crossover coming next year. "We've got already 35,000 people who are shown as serious intenders.

"You can see it in other brands, and there are certain mature EV markets," Goss said. "One in Europe in particular is Norway — 36 percent EV — and you look at the telescope through either end and you see all the urban myths disappear. Not just range anxiety, but how the customer actually deals with EVs, providing governmental authorities are also prepared to do their part with infrastructure, public charging and so forth."

The tide seemed to turn about 18 months ago.

"I think to some degree it was the proliferation of products and, of course, there is diesel tension in the marketplace. I think things have come together at the same time," Goss said.

There's also the Tesla factor.

"The obvious answer is Tesla has helped pave the way," he said. "That's the truth of the matter. They tested the market and became very credible, and that's a fact. But now what's coming over the hill is an armada of EVs."

Daimler is investing more than $11 billion to bring its Mercedes-Benz EQ subbrand and more than 10 new electric cars to market by 2022. Mercedes showed the EQA concept in Frankfurt, a compact EV that will go to market in 2020.

The company says EVs could account for up to 25 percent of global sales by 2025.

But the effort will hurt short-term profits, as traditional combustion engines deliver higher margins.

Once its family of EQ battery electric vehicles start selling in large quantities come early next decade, Daimler's Mercedes-Benz passenger car division could see two full percentage points knocked off its operating margin. Daimler is launching a $4.8 billion cost-cutting program to offset that pressure.

BMW Group plans 25 electrified vehicles, including 12 fully electric models, by 2025. BMW unveiled the BMW i Vision Dynamics electric concept in Frankfurt. A production version of the coupe-style sedan will launch by 2021.

While BMW CEO Harald Krueger told reporters in Frankfurt that electric cars generally won't be as profitable as vehicles with combustion engines, he said there was no need for BMW to set a specific savings target. BMW is sticking to a goal of 8 to 10 percent return on sales on the auto side.

Besides costs, other implications must be dealt with now. Just ask designers.

"I've probably worked my last full IC engine car," said Ian Callum, 63, Jaguar's head of design for the past 18 years. "There won't be another in my life. So everything I do now will have batteries somewhere — in great abundance — in the car, mostly under the floor.

"So there's your first issue for a designer who wants to build low cars. They're going to get taller. So we're going through this incredible soul-searching period where we deal with the extra height."

Callum added: "These changes are all over the place. The packaging challenges for us are enormous."

Peter Horbury, head of design for Geely and Lynk & CO, said automakers face a philosophical choice.

"The big discussion right now — we're having it and I think many companies are having it — is, 'OK, we're going autonomous electric. That signals a huge change. So should the car look as different as that technology will make it or will it be an electric version of a familiar shape?' And there are two schools of thought.

"I'm of the opinion that, because you can make it different [you should], because the electric powertrain gives other opportunities."

He said Jaguar's I-Pace "showed it beautifully ... the front end is minimal, the cabin is big. It looks like a midengine sports car. There is no need for a long V-12 or six-cylinder engine. ... You can use the room for other purposes."

Amy Wilson contributed to this report.