Volkswagen starts production at electric car plant in Germany — here’s what it could mean for the industry

Volkswagen starts production at electric car plant in Germany — here’s what it could mean for the industry
Volkswagen starts production at electric car plant in Germany — here’s what it could mean for the industry

Where are we at with electric cars?

Today marked a milestone in the industry, as Volkswagen began production at its revamped electric car plant in Zwickau, Germany. It is the company’s first mass-market vehicle using technology designed solely for battery-powered cars, and already has orders for 35,000 cars.

How soon will it be until the whole industry switches?

Although many carmarkers are focused on electric options, the shift is proving expensive. Companies have to invest billions in research and development, with fresh figures from BDO showing today that the total spend by the top 20 firms topped £70bn last year. That also includes money spent on autonomous driving.

An electric car and a plug-in hybrid car charge at a public charging station in Berlin (Photo: Sean Gallup/Getty)

Are they expensive for drivers?

Because the technology is not yet widely adopted, many electric models are still commanding higher prices. VW’s ID.3, which it is producing in the Zwickau facility, starts at just under €30,000 (£25,920). Some of the cheapest models on the market start at under £20,000.

A study earlier this year from the International Council for Clean Transportation (ICCT) calculated that electric cars are already cheaper to run, due to lower taxes and fuel costs as well as a range of subsidies.

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What are politicians doing?

German chancellor Angela Merkel, who has faced criticism in the past for being soft on the car industry, said on a visit to the VW factory that her government was prepared to make a “great effort” to make electric cars affordable. In the UK, a target of 2040 has been set for eliminating new sales of petrol and diesel cars.

Which manufacturers will be the winners of the shift to electric?

According to BDO’s data, American companies risk falling behind their European peers, who are outspending them on the development front. Chinese carmakers are also revving up investment.

Elon Musk’s Tesla, one of the best-known electric vehicle brands in the world, has tripled its research and development spend in the last three years – a rate much faster than any of the world top 20 carmakers. However its most recent annual expenditure of £1.1bn is just a fraction of VW’s £12.2bn, as larger companies start to put major investment into the area.

Eyad Hamouieh, partner at BDO, said: “The transition to electric vehicles may be the biggest single change the automotive industry has ever faced. The manufacturers that have reacted quickly by investing in electric technology should be in the best position to grow through that transition.”

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