A quick glance around the floor of this year’s Geneva auto show reveals a considerably reduced electric vehicle presence at many major automakers’ stands when compared with the considerably more bullish displays present in recent years. The state of the display floor in Geneva certainly serves as an apt summary of the auto industry’s ongoing debate regarding its future. While there is little dispute over the necessity of a shift to emissions free modes of transport, the timeframe in which this transition will take place is far more ambiguous. As Europe’s auto industry faces a stark future, many major automakers are reconsidering their entrance into the electric vehicle market.

While the Geneva auto show is typically an opportunity for Europe’s auto industry to bathe in media attention and introduce its wildest concept cars and upcoming models, this year’s show has been colored by a distinct lack of enthusiasm on the part of many auto industry chiefs. Sergio Marchionne, chief executive of Chrysler and Fiat and president of the European Automobile Manufacturers’ Association, repeated calls for the European Union to provide assistance to car companies who, Mr. Marchionne believes, will need to cut capacity in Europe by 20 percent in the near future. According to analysts, the European auto industry’s woes stem from a markedly reduced demand as Europe’s auto market has reached the point of saturation. Without measures similar to those employed by European governments in 2008 and 2009 which saw governments offering significant tax subsidies and incentives to consumers for the purchase of new vehicles, analysts fear that demand will remain stagnant and car companies’ unused capacity will continue to bleed losses.

While early signs of this downturn are already apparent in some parts of Europe, with automakers Fiat and Opel shutting down factories last year and Saab declaring bankruptcy, this decline has yet to swallow the entire industry. Demand for luxury cars appears to be less susceptible to the forces of economic downturn, with Volkswagen AG and BMW predicting continued sales growth for the year, largely on the strength of increased demand in China and the US.

Despite the negative impact the downturn has had on the European auto industry, there remain reassuring signs for the survival of the electric vehicle market among those automakers, such as Volkswagen and BMW, who have managed to retain a strong position. Volkswagen began the Geneva auto show by announcing its plans for a “fundamental ecological restructuring”, one which would see the company overhaul its entire organizational ethos to one which prioritizes environmental and sustainability related considerations. Volkswagen’s decision to invest two thirds of its €62.4 billion investment program, from 2012-2016, into “more efficient vehicles, powertrains and technologies as well as environmentally compatible production.” was seen as a strong display of the automaker’s commitment to developing low-carbon technologies. BMW, meanwhile, introduced a new hybrid version of its popular 3 series vehicles as well as displaying prototypes of its upcoming i3, its first fully electric vehicle, and i8 vehicles, a plug-in hybrid sports car. BMW is expected to launch its i-series of fully electric and plug-in hybrid vehicles in 2013, with Norbert Riethofer, the company’s chief executive, describing the company’s EV project as a long-term project which demands endurance from automakers.

However, even outside of those luxury automakers with the leeway to continue exploration of the burgeoning EV sector, executives such as Carlos Ghosn of Renault-Nissan and Dieter Zetsche of Daimler also reiterated their belief in the necessity of electric vehicle development and their continued persistence in furthering this technology despite current market fluctuations. Jérôme Stoll, executive vice president for sales and marketing at Renault, urged automakers to reconsider their approaches to selling EVs, noting that Renault had had to reassess the ideal consumer range for its EVs, targeting urban commuters and not long-distance drivers, for instance, as well as ensuring that car buyers are more well informed regarding battery range and the various potential limitations of EVs.

The pragmatic optimism on display among Europe’s struggling, budget automakers is also reflected in the number of young SMEs entering the EV market at present. A number of small and mid-size firms from all across Europe, including: France, Italy, Austria and Switzerland, have jumped at the opportunity to help pioneer the low-carbon vehicle sector.  The niche products introduced by these SMEs serve as an indication of the potential which the EV sector continues to hold for any number of future entrants of a variety of sizes, all of which will be necessary to ensure the sector’s success in the future.

Read more:

Auto Overcapacity Gives Leaders Another Issue to Ponder (NY Times)
Europe suffering from oversupply of cars, Vauxhall boss warns (Guardian)
Europe's Cars Lose Traction (Wall Street Journal)
Car makers battle to escape Europe's slow lane (Reuters)
Volkswagen Aims to Be Green and Mean (Wall Street Journal, The Source blog)
A More Circumspect View of Electric Cars (NY Times)
SMEs launch electric car push (news24.com)
Carlos Ghosn, the Undisputed Electric Car Leader in Geneva (Plugincars.com)

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