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German automakers — including BMW, Daimler, and Volkswagen (VW) — will spend about $45 billion on electric vehicle (EV) technology over the next three years, according to a new report from VDA, a German auto-industry trade group.
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The European Union unveiled aggressive emissions standards last year that will go into effect over the next decade: Auto companies are required to cut their emissions footprints (which includes their cars after sale) by 38% between 2021 and 2030, a goal which will require companies to shift toward selling EVs.
To meet the EU’s forthcoming emissions standards, German carmakers have aggressively invested in EV technologies and production across three core areas:
- Battery R&D and production. EV batteries are a challenging roadblock for automakers: They’re costly to produce, making EVs more expensive for consumers than traditional cars, and depressing sales as a result. EV batteries typically require cobalt, which is notoriously challenging, costly, and controversial to extract. Daimler is actively exploring ways to make EV batteries with less cobalt. In the meantime, it revealed last December that it’ll buy $23 billion worth of EV batteries now through 2030 to fuel its EV ramp-up. BMW, for its part, inked a $1.2 billion contract with a Chinese battery maker last year.
- EV charger networks. Automakers must facilitate broader access to chargers, so as to create an easier transition for users from fossil fuel cars to EVs. Some carmakers — notably Tesla — have extensive proprietary charger networks, but for later entrants like Daimler, BMW, and VW, it is more beneficial to collaborate, in order to quickly build fast, capable chargers that can be used by any EV. In fact, BMW and Porsche workedtogether to build an EV charger prototype they claim is three times faster than Tesla’s.
- Retrofitting and upgrading manufacturing facilities. The last key for automakers is to max out EV production, which is a tall task: Many automakers require new or retrofitted plants, as existing, decades-old facilities are ill-equipped to assemble or produce EVs, requiring new or retrofitted plants. To that end, Daimler is in the midst of building six new facilities in Europe specifically for EVs.
German autos will need these EV investments to translate directly to cheaper vehicle prices to boost sales abroad. In Western Europe, over half of all EVs on the road were made by German companies, per VDA. But in the US, for instance, they only control about 16% of the EV market. The issue could be price, a top barrier to EV adoption: BMW’s i3 costs over $44,000 in the US, while Porsche’s first-ever EV, the Taycan, will cost over $130,000.
Meanwhile, a version of Nissan’s 2019 Leaf costs as little as $29,000 in the US, while Kia has a pair of models coming out for the US market over the next year and a half that cost less than $40,000. German automakers need to introduce cheaper models abroad if they hope to expand their shares of other markets, like the US, as they too face increasing pressure to electrify.
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