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What the Paris car show says about the future of electric cars

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Jacky Naegelen/Reuters

(Read caption) Dieter Zetsche, CEO of Daimler and Head of Mercedes-Benz, attends a news conference in front of a Mercedes EQ electric car at the Mondial de l'Automobile, the Paris auto show, in Paris, on Sept. 29, 2016.

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Both Volkswagen and Mercedes arrived at the Paris Motor Show with brand new electric car designs and big plans for dominating future electric vehicle sales.

The fact that electric cars have made such a high-profile appearance at the Paris Motor Show represents an industry shift away from traditional engines and diesel as the threat of tighter emissions standards looms and Tesla's success challenges other car manufacturers to step up their electric car initiatives.

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Under a new brand "EQ" for Electric Intelligence, Mercedes Benz revealed the prototype for the first of its new line of electric cars on Wednesday. In the coming years, nine more electric cars will follow as part of Mercedes's new strategy: to secure 25 percent of the electric car market. EQ will also design home energy storage, a decidedly Tesla-like move.

“We’re now flipping the switch,” Daimler Chief Executive Officer Dieter Zetsche, told Bloomberg. “We’re ready for the launch of an electric product offensive that will cover all vehicle segments, from the compact to the luxury class.”

At the Paris Motor Show, Volkswagen took a step away from its emissions scandal by introducing the Volkswagen I.D., the first of the 30 electric cars the company plans to release by 2025. Unlike the e-Golf, Volkswagen's existing hybrid car, the I.D. was not designed around an existing model. Volkswagen plans to sell as many as 3 million electric vehicles each year by 2030.

The I.D.’s big selling point is its 370-mile range, which far outperforms any electric car currently on the market (the Tesla Model 3 gets 210 miles per battery charge). It also addresses one of the biggest consumer concerns about electric vehicles in general.

“This car is to fight Tesla and the others, not our conventional competitors,” Herbert Diess, head of the Volkswagen passenger-car brand, told The Wall Street Journal.  “We have to take them very seriously. It’s not rocket science. The other competitors are making great progress.”

Half a million buyers have already shelled out $1,000 just to reserve a Tesla Model 3, which is set to roll out in late 2017, exhibiting a level of consumer excitement that electric cars have historically failed to generate.

As the threat of tighter emissions regulations loom in the United States, across the European Union, and in China – making the cost of building combustion engines more expensive – automakers are also looking to get a foothold in the electric car market while the cost of building batteries is low. 

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This is particularly true of German automakers, since the reputation of diesel cars that once dominated the German car market have been tarnished by the Volkswagen emissions scandal. In first eight months of 2016, German automakers have seen the lowest diesel sales since 2012 with diesel cars making up just 46.8 percent of sales, Bloomberg reports.

In fact, electric vehicles are poised to displace diesel fuel, particularly in smaller cars, by 2030, according to a study by AlixPartners.

“This will go down as one of those years where it all started to change,” Andrew Bergbaum, managing director at AlixPartners, told The Wall Street Journal.