The Frankfurt motor show opened this week with the German car...

The Frankfurt motor show opened this week with the German car industry facing a crisis of confidence despite years of booming sales.

Two years after “dieselgate”, when Volkswagen was exposed as an emissions cheat, the industry is spending billions to develop electric vehicles in an effort to stave off regulators and reclaim the moral high ground.

An electric car was the star on virtually every stand at the show and by the middle of next decade Volkswagen, Mercedes and BMW expect to be selling them in the millions.

Volkswagen upped the ante on its electric plans with “Roadmap E”, which more than doubles its previous commitment with a pledge to offer 80 EVs by 2025 across its portfolio of brands, which include Audi, Skoda, Porsche and Bentley.

It has earmarked more than €20bn for development and, in one of the largest procurement tenders on record, has budgeted €50bn to source batteries.

The goal is to offer an electric version of each of its 300 group models by 2030 and be selling about three million a year.

Chief executive Matthias Mueller said it was vital Volkswagen led the way to an electric future.

“This is not some vague declaration of intent. It is a strong self-commitment which, from today, becomes the yardstick by which we measure our performance,” he said.

“The transformation in our industry is unstoppable. And we will lead that transformation.”

Volkswagen’s show centrepiece was a compact battery-powered SUV called ID Crozz, one of a family of models built on a newly developed platform with zero-emission ranges up to 600km.

It will reach showrooms in 2020 along with a Golf-sized car simply called ID, followed two years later a modern recreation of the Kombi badged ID Buzz.

Eventually, 23 EVs will be offered under Volkswagen’s own badge.

Despite being rocked by the emissions scandal and being forced to pay billions in compensation, Volkswagen group achieved record sales of 10.3 million last year, up 4 per cent, putting it ahead of Toyota and General Motors.

However, there has been a backlash against diesel engines in Europe with many cities considering moves to restrict them including Stuttgart, the home of Mercedes and Porsche.

In Europe, the home of “clean diesel”, sales have dived and diesel engines are now fitted to fewer than half of new passenger cars, down from 56 per cent five years ago.

Against that, demand for alternatives including hybrids and EV is up almost 60 per cent over the first half of this year, albeit from a low base.

Britain and France have declared a ban on cars that rely purely on combustion engines by 2040 and the world’s biggest vehicle market, China, is considering similar action.

Mercedes-Benz chief Dieter Zetsche said moves to ban particular drivelines were missing the point and diesel remained vital for the future.

“It’s worthwhile to improve modern diesel engines rather than ban them,” he said. “We need diesel if we are to achieve our climate targets through less CO2 in road traffic.”

But he said there had been “a loss of trust in the German car industry’s power of innovation and sustainability. And I regret that very much.”

Fortunately, Daimler, maker of Mercedes, was in a strong position to invest “massively into our future” thanks to the strength of its core business.

Mercedes reclaimed top spot in the global premium market last year with sales up 12 per cent to 2.2 million, and has committed €10bn to develop battery cars with the goal of more than 50 electrified vehicles by 2022.

They will include all versions of its Smart city runabout, which will be the first brand to go solely electric and will also spearhead the company’s move into autonomous car-sharing.

Under its own badge, Mercedes launched an electric sub-brand called EQ at the Paris motor show 12 months ago and centre-stage at Frankfurt was the second car in that family, EQA.

A streamlined compact, EQA has 60kW/h lithium ion batteries, two electric motors with up to 200kW of power and all-wheel drive. Real world range is 400km and it can be recharged inductively, by a wall-mounted box or via a rapid recharging station.

It will be one of 10 pure EVs within five years. First on sale will be the larger EQC, a compact SUV, which arrives in Australia in 2019 with a starting price above $75,000.

BMW also celebrated record sales in 2016, its sixth year in a row, and development chief Klaus Froehlich said it was accelerating its EV rollout in response to the industry’s “compromised” credibility, which was leading to tighter regulation.

It has set a renewed target of 25 electrified cars by 2025, half of those pure EVs. It will also build flexibility into future models so that any driveline — combustion engine, plug-in hybrid or battery — can be fitted according to demand.

Its show centrepiece was a study for a mid-size luxury four-door with pure electric power, a 600km range and acceleration to 100km/h in just 4 seconds.

Called i Vision Dynamics, it will be the third model in BMW’s efficiency sub-brand i and is expected to be badged i5 when it reaches showrooms in 2021.

“With the BMW i Vision Dynamics we are ... electrifying the heart of the BMW brand,” said chairman Harald Krüger.

BMW launched i four years ago with the i3 city runabout and i8 plug-in hybrid sportscar. It expects to sell 100,000 electrified vehicles this year.