Short-term gain puts brakes on German car companies’ electric dreams

The push toward electric cars has been widespread and well documented since the 2009 Frankfurt Motor Show. Yet, German companies have been either lax or reluctant to adopt the new technology despite the success of visionary pioneers such as Elon Musk with Tesla and Carlos Ghosn with the Nissan Leaf.
In fact, Daimler had investments in Tesla but sold its shares in 2014.
Now, the mad rush is on to cover lost ground. The latest Frankfurt show this year saw dozens of German electric concept cars that will hit the markets over the next five years.
The fact remains that ultimately German companies made too much money from non-electric cars to focus enough on the future.
German car manufacturers are commanding huge profits from premium fossil-fuel brands they produce. The result is that they are reluctant to change a pattern that is very profitable and convenient.
Electric cars are expensive to produce and their profit margins are very slim. The industry has been waiting for costs to come down enough to make a partial shift toward battery power.
China’s move to impose a quota of electric vehicles on car imports and the announcements by some European governments of a 2040 deadline for producing only electric and hybrid cars, however, has caused a scramble by all car companies to make up for lost time.
To prepare for the expected drop in profit margins, German companies have focused on cutting costs — by up to €4 billion in Mercedes-Benz and $2.4 billion in BMW.
In the short term, German companies may enjoy a good run of profitable gasoline-powered vehicles. But in the long run, these companies may have missed a rare opportunity to lead in electric mobility technology. Instead they waited and let others take the lead — and the rewards. The result is that China now dictates the ratio of electric cars it needs and German companies have no choice but to comply.
• Adel Murad is a senior motoring and business journalist, based in London.