• Bloomberg


Klaus Doerrzapf, who has installed solar panels on his roof but has no plans to buy an emission-free car, is one of the reasons automakers such as Nissan Motor Co. won’t recoup investments in electric vehicles anytime soon.

“It’s too early,” the 50-year-old manager at an electronics company said at the International Motor Show in Frankfurt, Germany. “Range and price are a problem. Battery life and charging times are also concerns,” Doerrzapf said while checking out an electric-powered Focus from Ford Motor Co.

BMW, Volkswagen and Nissan partner Renault talked up their electric vehicles at the Frankfurt motor show as they rolled out a record number of models and began the search for a return on their development spending.

Nissan, which produces the all-electric Leaf, is investing $5.5 billion together with Renault to build electric cars.

The Leaf was introduced last year. Mitsubishi Motors Corp.’s iMiEV and General Motors Co.’s Chevrolet Volt are the new models that will test consumer appetite for electric vehicles, which are twice as expensive as conventional models. Consumers are balking at paying up, concerned that their own investment will be wiped out in a few years because the batteries may not last.

“We’re about to find out what happens when several big manufacturers try to sell electric vehicles to real people,” said Ian Fletcher, a London-based analyst with IHS Automotive. “The signs aren’t all good.”

Nissan has delivered 12,000 Leafs since its introduction in December, CEO Carlos Ghosn said in Frankfurt. PSA Peugeot Citroen, which beat Renault to the market with two electric cars last December, has targeted 7,000 combined deliveries of the iOn and C-Zero models for 2011. It has sold 3,000 since Jan. 1.

Nissan said last November it planned to sell as many as 25,000 units of the $32,780 Leaf in the U.S. during the model’s first year. But through August, U.S. sales of the model totaled just 6,168.

The Leaf, which has a range of about 160 km per charge, costs £25,990 (¥3.1 million) in the U.K., even after the deduction of a £5,000 government incentive, while the brand’s similar size Note starts at £11,200 (¥1.3 million). In France, the €5,000 government contribution lowers the starting price of Peugeot’s iOn to €35,350 (¥3.7 million), compared with €9,700 (¥1 million) for the gasoline-burning Peugeot 107.

“I wouldn’t buy one just yet,” said Jean-Pierre Ahtuam, 38, who runs a juice bar in central Paris. “I’d be worried about where I’d plug it in and whether it will be worth anything in a couple of years — that’s got to be a concern with any new technology the first time around.”

Costly batteries and limited driving range remain the key technological sticking points. Public charging stations are also conspicuously absent in most markets. Even the technology’s strongest advocates recognize that success hinges on years of generous subsidies from increasingly cash-strapped governments.

“As things stand, it’s only with this support that we can make the cars affordable for consumers,” said Thomas Orsini, Renault’s electric vehicle business development director. Renault is predicting a 10 percent global market share for battery cars by 2020. “If the subsidies disappear too soon, the market won’t get off the ground.”

Subsidies help to absorb the €7,000 cost of a battery that will propel a compact car about 160 km on flat terrain between charges — providing that heating and other energy-draining functions are used sparingly or not at all.

The batteries’ price and limited lifespan will combine to make electric vehicles depreciate faster than combustion engine models in the used car market, according to a study by the University of Greenwich in London.

“Electric cars suffer from the certainty, not just risk, of a large fixed cost a few years down the line,” said Michael Wynn-Williams, a business professor and author of the study. “This is sudden death, the point where an otherwise attractive vehicle is worth nothing.”

To get around this problem, Daimler AG plans to follow Renault’s lead by initially leasing the batteries with its cars. The electric-powered Smart city car will start at less than €16,000 (¥1.7 million), with the battery costing an additional €60 a month.

Ghosn remains bullish, however. Demand for Nissan’s Leaf has outstripped expectations, he said Sept. 12.

“When we first predicted a 10 percent market share, people said we were being extremely optimistic,” the CEO said. “Since then, it’s the experts who have increased their forecasts.”

Not all industry analysts got Ghosn’s memo. Fletcher of IHS expects battery-powered cars to claim about 1 percent of global production in 2020, while rival research firm J.D. Power and Associates puts their market share at less than 2 percent. The forecasts exclude cars with range extenders, such as GM’s Volt, which use a small on-board gasoline generator to recharge the battery on the move.

Even some of the auto executives in Frankfurt sounded skeptical about the future of purely electric models. Peugeot Citroen sees three times more global demand for hybrids, which combine electric propulsion with a combustion engine.

“Everything we’re seeing today confirms that vision,” said CEO Philippe Varin.

Consumers such as Doerrzapf, who owns a VW Passat and works for a company supplying the type of electronics equipment needed to recharge the vehicles, may yet change their minds.

“They are nice to drive,” he said.

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