Daimler Hints That Electric-Vehicle Sales Would Collapse Without Subsidies

Automakers in the US and Europe that have dedicated vast resources to developing electric or hybrid vehicles are slowly waking up to an uncomfortable reality: The market for electric vehicles in the West would simply not exist without subsidies.

Even with the generous tax credits and rebates, received more often than not by wealthy buyers who treat their Teslas like expensive playthings, sales of these vehicles have lagged expectations at every turn. And now one German car maker is proving that effective state sponsorship of the EV industry still isn't enough for auto manufacturers to hit lofty sales targets.

To wit, German carmaker Daimler told investors Monday that it would be saving 4 billion euros ($4.8 billion) by 2025 to help offset the lower profitability of electric cars, which it now believes will earn only half the profit margins of traditional IC vehicles. According to Reuters, the company’s Mercedes-Benz brand is preparing to launch its “EQ” electric car, which shares some characteristics of the Mercedes-Benz GLC, a model that sells at a rate of around 1,000 cars a day. Even if the EQ proves popular, Daimler told investors that it expects to take a hit on profits, at least initially.

You heard that right: On top of the generous subsidies that European governments extend to consumers, Daimler is effectively offering a discount on the sticker price as an added enticement to meet its optimistic sales goals.

“In the beginning of the cycle we believe that we will have to face a significantly lower margin, for some vehicles half of the margin of the vehicles they replace,” Frank Lindenberg, Vice President of Finance and Controlling at Mercedes-Benz Cars, said at Daimler’s investor day.

The desire to goose sales isn’t surprising: As some readers may recall, Obama famously predicted that there would be one million electric vehicles on US roads by 2015. To date, electric vehicles in circulation in the US number 500,000. Expectations in Europe have also fallen short.

While many European governments offer electric vehicle owners subsidies through various tax exemptions, the US has since 2010 offered buyers of qualified plug-in electric-drive vehicles a federal tax credit of up to $7,500. These credits are available for the first 200,000 customers of each auto company producing eligible vehicles. To date, Tesla has sold nearly 100,000 vehicles, which would put the company near the halfway point of its 200,000 federal tax credit, according to a report by Edmunds published last spring.

To find confirmation of just how important tax subsidies are to boosting sales of electric vehicles, look no further than a batch of European Automobile Manufacturers Association sales data released back in June…
As we noted at the time, sales of Electrically Chargeable Vehicles (which include plug-in hybrids) in Q1 of 2017 were brisk across much of Europe: they rose by 80% Y/Y in eco-friendly Sweden, 78% in Germany, just over 40% in Belgium and grew by roughly 30% across the European Union.

But there was one notable exception: Sales in Denmark cratered by over 60% for one simple reason: the government phased out taxpayer subsidies.

The Denmark case study is emblematic of where the tech/cost curve for clean energy vehicles currently stands. Despite the lofty aspirations of “green” pioneers, rescuing the planet from fossil fuels is, simply put, economically unfeasible. The data also show why Trump's recent withdrawal from the Paris Climate Treaty is nothing short of a business-model death threat for Tesla and other OEMs that have ventured into the electric space. As Elon Musk probably knows all too well, the results confirm that "clean-energy vehicles aren’t attractive enough to compete without some form of taxpayer-backed subsidy."

But costs aside, there’s another reason why – despite Elon’s plans for a more-affordable Tesla – electric vehicles are still years away from widespread adoption: The recharging process remains unrealistically time-intensive. The idea that hundreds of thousands of electric-car users would queue up to spend 30-45 minutes each at a recharging port is ludicrous – imagine if you had to wait that long to grab a burger at McDonald’s? And what if we told you there was a Wendy’s across the street that’d serve you that same burger in under five minutes. Which restaurant would you patronize?

Leaving aside the economic absurdity of electric cars – the least expensive of them cost more than $30,000 (heavily subsidized, the true cost is much higher), we’d wager that most Americans simply don’t have an extra half hour during their morning commute to wait for their car to charge. Hell, even a 15-minute wait would be unacceptable. Perhaps if carmakers could build a battery that could power a car for 600 miles before needing a charge, consumers might find that to be a suitable offset. Until then, spending an amount of time equivalent to watching one episode of the Sopranos waiting for your electric car to charge simply isn’t feasible for most commuters.
 

Read the the Edmunds report in full below:

EV Report April17 by zerohedge on Scribd

 

Comments

JohninMK EEEEEEEEEEE (not verified) Mon, 09/11/2017 - 15:56 Permalink

But but over here in Europe about 90% of the pump price is tax, generating huge sums.As Governments will not want to cut spending by that amount, where are the going to raise those billions from?Put up the price of electricity?New car tax?Annual on the road tax?No mention of this in the discussions but it seems to me to be a killer.

In reply to by EEEEEEEEEEE (not verified)

fx JohninMK Mon, 09/11/2017 - 16:09 Permalink

But, but "walk-on-water-elon-musk" said that EV subsidies were actually HURTING his business! No kidding, that's what this scamster said, and with a straight face.I say, stop this nonsense, subsidize the development of sustainable EV technologies, but end this current Li-Ion cars-for-the-rich-hipsters crap!The slimy snake-oil salesman and con-artist Musk has become a billionaire entirely due to misguided taxpayer subsidies. High time to kick that clown in his arrogant ass!

In reply to by JohninMK

jcaz fx Mon, 09/11/2017 - 16:20 Permalink

Yep- wait until Elon learns a new term- "Market Forces".   When the market starts to price electric cars rather than Blue Sky pimps,  all the cool factor goes away, the nerds start caring how much they're paying, and he's just another peddler.Go dig more holes in the ground, bright boy- plenty of taxpayer subsidies in that......

In reply to by fx

Escrava Isaura jcaz Mon, 09/11/2017 - 16:28 Permalink

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LOL. An electric car? Without government subsidies we wouldn’t have had the transistor, even less a computer. Wonder why? Because no company would be willing, even less be able to survive decades of losses. Free market is only to sell oranges, but don’t tell that to idiots.  

In reply to by jcaz

Escrava Isaura chiswickcat Mon, 09/11/2017 - 16:47 Permalink

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I could say that the word Hedgers wouldn’t exist. Technology made the smart class very wealth and the unskilled labor dispensable.  

In reply to by chiswickcat

Escrava Isaura VZ58 Mon, 09/11/2017 - 16:59 Permalink

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Well, we have over 7 million people, right? Wonder how we achieved that? By becoming an industrial society. If we had remained a rural society, we wouldn’t be able to feed 1 billion people, if that. Industrial society, as we know, wouldn’t exist without lots of investments in education and technology, meaning, in no way the general population, thought its free market could pay, and even less develop the industrial society as we have it now.  

In reply to by VZ58

Escrava Isaura Omni Consumer … Mon, 09/11/2017 - 17:24 Permalink

The problem is not Paul, Peter, or Ishmael Krugman. The problem is that what the conservatives want for America, because the way America is currently structured, and run, it will be a total disaster for America. That’s why Trump fired Bannon. Trump can’t, and won’t allow financial and social suicidal under his watch, after all, Trump is an opportunist, not an ideologist. Conservative policies cannot work in an industrial society, even less in a an empire. Conservatives are very good locally, because they are more resilient, more self sufficient, stronger, and more patient than a liberal can be.     
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In reply to by Omni Consumer …

Caloot Escrava Isaura Mon, 09/11/2017 - 17:32 Permalink

May I suggest a return to history class. Preferably not one in your Marxist paradise government run public schools. I won't even bother pointing anything out.  That would be a waste of time. Just to note to the other folks who have made the mistake of reading your revisionist dribble.  You don't know what the fk your talking about.

In reply to by Escrava Isaura

Automatic Choke Escrava Isaura Mon, 09/11/2017 - 18:27 Permalink

Hey Escrava -This country still has a shitload of hard working people who have gotten education and training, and then worked and saved for years, and have done so under the rules of the system.  If you want a socialist/communist paradise, you have no right to change the rules here as an excuse to confiscate the savings of hard working people.  Go fuck yourself and don't slam the door on the way out.  May I suggest Venezuela?  Cuba?  North Korea?  There are lots of worker's paradises out there waiting for you, why are you wasting your breath here? 

In reply to by Escrava Isaura

too_big_to_fail JohninMK Mon, 09/11/2017 - 17:13 Permalink

VERY EASY SOLUTION, HAVE THE ELECTRIC COMPANIES SUBSIDIZE THE ENTIRE PRICE OF THE ELECTRIC CAR.

How much profit would the electric companies generate over the life of the car.

I heard the US uses about 15 million barrels a day, at $48 per barrel, that is $720,00,000.

Amazing the electric companies have not done this.

Exactly as Gillette razors, give the razor away for free, charge for the blades.

In reply to by JohninMK

Mr 9x19 too_big_to_fail Mon, 09/11/2017 - 18:30 Permalink

problem of EV subsidized is by the oil taxes( in europ, french = 75% of oil price is taxe. ) you want people to use another tech, fine, where you take taxes from to subzide the shift... ?everyone lucid enough know the nuke plants must be dismantled in the next 40 years, grid price will explode.they collapsed the solar panel industry in 2006 with taxes just to prevent anyone to be resilient. if you have a car without need of oil and you create your own solar energy, what the fuck  happen to the oligarchy ? you mad bro ?the system is on an old paradygm, an old routine, an old mecanic. if you change one thing, you unbalance the whole, and it is unacceptable by actual elite.change will come, because we cannot avoid it, but it will be a cost noone have the ability to figure out.

In reply to by too_big_to_fail

NoDebt Arnold Mon, 09/11/2017 - 15:42 Permalink

I don't care how good or cheap you think battery technology has become (or will become in the next 10 years), you're not going to beat the cost effectiveness and energy density of a $10 stamped sheetmetal gas tank filled with combustible hydrocarbons.That being said, we'll probably just keep passing legislation and regulations until it does.

In reply to by Arnold

Canadian Dirtlump NoDebt Mon, 09/11/2017 - 16:04 Permalink

I expect you're right - these things are going to be forced on us as an act of social engineering, much like the savage hordes from overseas are. I don't think they are going to be successful, but they're sure going to try.Regarding these batteries, let's not forget that much of the lithium is sourced by destitute african children. I wish the noses of the smug fucks who drive these welfare mobiles were rubbed in this fact more. I know I do it whenever the opportunity arises. https://www.amnesty.org/en/latest/news/2016/01/Child-labour-behind-smar…

In reply to by NoDebt

BarkingCat Canadian Dirtlump Mon, 09/11/2017 - 17:42 Permalink

I don't give a shit about some Afrikan children.They grow up to be sub 75 IQ adults too stupid to realise that when you cannot feed a family of 5, you don't have another 10 kids.Also that fucking an infant is not going to cure you of AIDS.At least when they are digging up minerals they are doing something productive.....and European kids have done it for generations in the past so it's not like this is unique to only them.Now dig little fuckers, dig.

In reply to by Canadian Dirtlump

NumNutt NoDebt Mon, 09/11/2017 - 17:17 Permalink

Next time you are on a major interstate, count how many cars that are electric are driving long distance (out of state tags). Here is a hint - none! It takes 15 minutes to fill my gas tank, take a piss, and get a cup of coffee (longer with wife). How long does it take to recharge one of those stupid fucking electric cars so it can go 250 miles? Oh and my suburban will get close to 500 miles on a single tank of gas, while carrying all the family, luggage, and towing a boat....Do that in a electric car. They were dead before they started, waste of time and money....

In reply to by NoDebt

BarkingCat NumNutt Mon, 09/11/2017 - 17:50 Permalink

Lithium batteries can be recharged very quickly.I read it takes about 15 minutes.This is because lithium technology is completely different from lead/acid battery technology.I just bought some lithium ion batteries for my RV.This is a slightly different technology than that used by electric cars, in that it is less energy dense but also safer, no Tesla type fires.The specs say that I can fully charge these from nothing to full in 30 minutes.Of course, I will use them to power my lights and appliances and not for propulsion but the technology seems very promising. 

In reply to by NumNutt

Mr 9x19 NoDebt Mon, 09/11/2017 - 18:35 Permalink

we have alternatives, for decades, it is just there is an absolute will to keep transport+energy revenues to privates corp.once you remove the revenues and the taxes of energy... what happens... you rebalance the world  poles. and usa is no 1#so all is about reserve currency and domination for petro dollar.they realize they can't keep petrodollar ad vitam, a change is happening but it is all damage control.we won't make EV for 8 -10 billions people with li-ion battery while in 2017 you have  testla cars in usa and still 1930 bus in india.the gap is too huge.

In reply to by NoDebt

Thoresen Erek Mon, 09/11/2017 - 16:00 Permalink

Power stations have only 30% to 50% efficiency at converting fuel to electricity, so the whole electric car industry is based on a false premise. Are we really going to meet a new electricity demand of double current demands using wind power?
All electric cars achieve in the short term is a reduction in car emissions on city roads.

In reply to by Erek

BarkingCat Thoresen Mon, 09/11/2017 - 17:58 Permalink

No, we are not.The proponents of electric cars seem to conveniently forget that part.Electric cars are not any "greener". The location of the pollution is simply transferred to another location.....unless the electricity is generated by hydro, solar or wind.With regard to wind, there were a whole bunch of windmills along I90 east of the Cascade mountains. I just drove that route last week and they are ALL gone. I don't know why but it is interesting as that area always has strong winds so it would seem perfect for them.Maybe it had nothing to do with profitability.Maybe it was killing some yellow spackled ass flying squirrels or gay gypsy moths or something.

In reply to by Thoresen

HuskerGirl Mon, 09/11/2017 - 15:32 Permalink

Really?  The plains states are being littered with wind turbines.  Do you think those would be there without subsidies? If there is federal money available people will take it.