They have been trailing the US e-car pioneer for years but now VW, Mercedes-Benz and BMW are pumping billions into mass producing their own electric cars. Tesla's German competition will get really serious this year.

German carmakers are perfecting the art of the slow reveal.

"Welcome to production hell," US entrepreneur Elon Musk famously told a staff party last year, as he gloomily predicted all sorts of problems at Tesla’s Model 3 factory where he and his staff were struggling to start mass production of Mr. Musk's newest electric car. And indeed the e-mobility pioneer, founded in 2003, has run into several roadblocks, forcing Mr. Musk to change production targets several times. It's clear that, when it comes to their own electric cars, Germany’s auto manufacturing giants want to avoid these kinds of problems.

VW, BMW and Mercedes-maker Daimler have increased their investment in electromobility, aiming to produce e-cars at a fast clip reliably and find the customers willing to buy them. The German automotive industry invested €4.7 billion between 2016 and 2017 in adapting its factories, more than all the other big competitors together, according to an analysis by consultancy EY. Of the sum, €3.1 billion was invested in Germany, three times as much as in China and the US.

"The worldwide automotive industry is undergoing radical change — and German automobile groups in particular are currently working flat out to make their production plants fit for the challenges of the new automotive world," said Mathieu Meyer, a partner at EY.

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So far, things have not exactly been going to plan. BMW’s electric i3 has been on the market since 2013, but it has only seen lukewarm sales. Daimler has been mass-producing electric cars since 2009 with its small city car brand, Smart, but the model never gained the popularity of Tesla’s autos. Mr. Musk, on the other hand, last year sold more of his top-of-the-line Model S in Europe than either the Mercedes-Benz S Class or BMW 7 Series, after it had already outpaced the Germans in the US.

Audi, the luxury carmaker, part of VW Group, will be the first German producer to test the current market with its all-electric e-tron quattro, which will go into series production by the end of this year. The SUV will start selling at €80,000 ($99,000) in Germany and has a range of up to 500 kilometers (311 miles). It is a direct rival to Tesla’s Model X: The wing-door SUV with a 295-mile range costs $96,000 in the US. In 2019, Audi will launch a fully electric e-tron Sportback, a mix between a coupe and an SUV, comparable to Tesla’s Model S. If all goes well, Audi plans to produce 20 different electric cars by 2025, which should account for about a third of annual production. Last year, Audi sold 1.88 million vehicles.

BMW, Mercedes, VW and Porsche will follow Audi through 2019 and beyond. The BMW i4, an electric version of BMW’s best-selling 3-Series, will go into production in 2020 in Munich, where workers will assemble the electric car in the same factory where they make gasoline and diesel-powered vehicles. About a quarter of BMW's current capacity will be kept available for the new model, but the production volume could also rise to half of the plant's total annual output of around 220,00 vehicles. By 2025, as many as a quarter of BMW or Mini's global sales could be electric – that is around 500,000 units per year.

Mercedes-Benz will also integrate electric car production into existing plants, but Volkswagen, which as a group produces four times as many cars as BMW and Daimler, has developed a completely separate technical platform for its electric cars and is setting up separate factories. The numbers of units sold by VW are so high that it is worth having infrastructure specifically for electric vehicles. The modular system will also be used by the group's Skoda, Audi and Seat marques.

The VW brand alone is aiming to produce 1 million purely battery-powered vehicles a year by 2025, while the total for the entire group is expected to be about 3 million. Around half of these are expected to be sold in China, the group's biggest single market. The VW Group plans to invest over €20 billion in new electric cars by the end of 2022. Production will initially be focused on one central plant in Zwickau, Saxony, in order to minimize the risks associated with the launch of new vehicles. By the end of 2022, the group expects to be producing electric cars at 16 sites worldwide.

If the VW and their domestic peers don't make the same mistakes as Tesla and live up to the German hallmarks of high quality engineering and mass manufacturing expertise, churning out millions of e-cars should be a production paradise. For Elon Musk, it could end up being a different kind of hell.

Markus Fasse specializes in aviation and automobile industry news and works from Handelsblatt's Munich office. Stefan Menzel writes about the auto industry focusing on Volkswagen. Gilbert Kreijger is an editor with Handelsblatt Global. To contact the authors: [email protected], [email protected] and [email protected]