Frankfurt Autoshow: the Invasion of Electric Cars

Car shows tend to follow the same pattern: a bunch of cars, new model launches, some concept cars that will never be commercialized, boring corporate speeches plagued with powerpoints and some figures showing how innovative they are, and that’s pretty much it. But Frankfurt autoshow, the IAA as its known, is different. It is one of the world’s largest car shows with over 930,000 visitors during two weeks.

This bi-annual event went into a different gear this year. One main reason was the recent Chinese government announcement for a mandate to encourage (strongly) the manufacturing and sales of electric vehicles (EV’s). That certainly rattled the entire industry and prompted a rapid reaction from the car manufacturers. Another major reason was the potential ban on manufacturing and sales of combustion engines, specifically diesel engines in Germany by 2030, which will change a lot of things in the country and the entire world. Over 600,000 jobs depend on combustion engine production in Germany alone… So it was fair to say that this year’s edition was due to be very different.

BMW took the IAA seriously this year by announcing an entire line up of EV’s, including their famous motorbikes and scooters. EV’s, however, didn’t take all the limelight to the surprise of this writer.

A lot was going on around the IAA. For example, Mercedes-Benz’s attempted to organize a “tech event” with SXSW eloquently named “ME convention” with headliners such as of Sheryl Sandberg, Dieter Zietsche (Daimler Chairman) and Guy Kawasaki, whom we had the chance to meet.

Right from the start, Guy points out to the Arcticstartup name, “Whoa, that is an out of the box name. Where is it from?”. He is a social media guru with a total online following of 15 million and formerly the Marketing Lead at Apple, where he was the first in the industry to adopt the title of Evangelist. For a 63-year-old, he is in a remarkable shape, way better than many in their 30’s and questionably even this writer…

I surf and do a lot of sports” he bursts to laugh when asked about his shape. “Can I surf in Finland?”,

Yes!“, I answer, “If freezing your mind off is your thing.” Guy loves laughing out loud, and clearly enjoys life, it’s contagious. Guy is at Frankfurt IAA due to his close connection with Mercedes-Benz where he is the Global brand ambassador.

I asked Guy his opinion on the future of mobility.

It’s all going towards electrification and autonomous driving for heavy vehicles”. Yet, he still loves to feel the power of an AMG engine. He was an avid autonomous driving advocate until he stepped into a Mercedes-Benz GT AMG. “That machine was a life-changing experience, there is nothing like the sheer power that moves your soul like that”, he suddenly started beaming like a kid when talking about the AMG.

I don’t want an autonomous car,” he continues, “I don’t see how it is going to enhance my life, but I get why it should be introduced”. The EV market is slowly but surely gaining traction, especially in the developing markets like China and India where pollution from traffic is reaching alarming levels. Tesla, Nissan-Renault and the Germans are fighting for the top dollar, but who can really capture peoples’ imagination and make the market want an electric car?

That is the 100-billion-dollar question“, says Guy, “The majority of people are not really turned on by EV’s, and that’s understandable. They lack soul”. He was adamant about one specific thing: “Innovation is not something that should or can be an evolutionary aspect of technology. Innovation is a newly created feature or service to an existing product. That’s why Apple is stalling whereas Tesla and Mercedes-Benz are pushing ahead firmly.

Although Tesla was not physically present at the IAA, its presence, however, was felt throughout the event. Most of the OEM’s (original equipment manufacturers) at the IAA presented some version of an EV, and this time it was not just a show. They really came out swinging with market-ready products.

The EV sector is growing faster than anticipated. Most of it is fueled with the rush to be on time to the Chinese market, which will be the key to future of EV adaptation and market.

Tesla’s competition got new winds to their sails, as Tesla released their latest vehicle delivery reports. Tesla delivered only 260 units of Model 3 so far (in total), instead of the forecasted 1500 units, proving its inexperience in large-scale delivery. Being able to deliver EV’s to their customers within 6 months after purchasing is crucial to customer loyalty and widespread brand value, especially in volatile markets such as China.

The largest EV market leader, however, is not Tesla or a German manufacturer but Renault-Nissan, with 27,000 registered cars in 2017 between the periods of January to March compared to Tesla’s 20,000. Renault-Nissan alliance is crushing and it’s not difficult to see why. They provide buyers with affordable EV’s, such as the Leaf with a price tag of $38,000, that is not very glamorous but gets the things done.

At this moment, China as a country remains the biggest EV manufacturer with OEM’s such as BYD. 50% of world’s EV’s is being made there and it is also the biggest market for the EV’s. One reason for this is perhaps one of the most generous subsidies for purchasing a car in the world. For example, a car worth $32k would get a whopping subsidy of $19k! Additionally EV owners are not required to pay parking or congestion charges in China’s largest cities, which makes ownership of an EV even more attractive.

Frankfurt IAA made few things very clear:

A) Electric cars are coming and they will reach the mainstream earlier than we think.

B) There is not a big demand from the mainstream public for electric cars now, but that doesn’t matter at this moment as OEM’s are pushing ahead trying to anticipate the future with immense Fear Of Missing Out,

C) Last but not least, when China jumps in, the rest of the car industry will follow.