Will Germany’s electric sizzle fizzle?

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It is no surprise that car-mad Germans put on the largest, most lavish car show in the world. The German economy depends on the export success of the auto industry, plus millions of German consumers get their kicks by cruising at 200 km/h plus on unrestricted sections of the autobahn in shiny hardware from Stuttgart, Munich and Ingolstadt.

But the industry is changing fast as tough environmental regulations are forcing auto makers into an era of low-emission driving. So let's take a look at Germany's, and hence the world's, top three premium brands and their presentations at the Frankfurt auto show, which is under way.

We'll start at number three, and, yes, mighty Mercedes has slipped from the top to third place. Nevertheless, M-B vows to return to the pinnacle some day and is showing off its products in the largest, most opulent car show stand I have ever seen. Mercedes moves into the Festhalle Frankfurt for the auto show and converts this massive concert hall, which can house nearly 15,000 people, into a towering, multi-level automobile extravaganza.

The best stunt of the show had Daimler CEO Dieter Zetsche riding in the back seat of a driverless car. The S-Class sedan made its appearance on a high level of this gargantuan structure and proceeded to drive down a long, narrow, guardrail-free ramp to the main platform where it performed a tight circle to allow Zetsche to get out. I have ridden in a few of these autonomous driving cars from various manufacturers but there is always someone at the wheel in case something goes wrong.

However, in this case, Zetsche was on the tightrope without a net. I'm told the drive had been rehearsed countless times and that there was an engineer hovering over a remote control stop button in case things went haywire. This is a high-risk stunt and, if the big Merc had taken a nose dive off the edge of the ramp, it would certainly be bad news for both Dieter and autonomous driving, which is still about 10 years away.

More significant for Mercedes, was the world launch at Frankfurt of a compact crossover – the GLA. Mercedes desperately needs younger buyers and is rolling out front-wheel-drive compact cars and crossovers to compete with the Camry and Accord. The GLA is the boxy version of the CLA sedan, which is arriving in Canada now with fuel-efficient four cylinder engines. Environmental regulations are forcing auto makers like Mercedes to go where they've never gone before.

Number two Audi, has number one BMW in its sites. At Frankfurt, Audi revealed the Nanuk – that means polar bear – Quattro concept. It's part sports car, part crossover with a 550-horsepower V-10 engine – kind of an off-road supercar. It's stuff like this that boosts Audi's "premium" image and that drives sales.

China is Audi's largest national market, where it sells half a million vehicles a year. The president of Audi China, Dietmar Voggenreiter, said, "First of all, we passed Mercedes-Benz and we will pass BMW soon. 2020 is our target to be number one. It would be easy to pass them on volume, but we must also have financial performance, customer satisfaction and strong image to be first in the premium market."

Let's go now to the ultra-modern BMW pavilion, specially built for the bi-annual auto show, which features a lengthy test track that snakes around the upper reaches of this massive building. Running silently and fast along the track was a fleet of i3 electric cars.

BMW has risked billions of dollars to develop this all-electric "premium" car although global sales of plug-in cars in general are below 1 per cent of the market. The batteries in an all-electric weigh 450 kilograms so BMW is using expensive carbon fibre-reinforced plastic on the i3 to reduce 350 kilograms from the body compared to using steel.

The result is a small four-passenger car that can go 160 kilometres on a charge but it arrives with a sticker price of more than $40,000 in Canada. Carbon fibre will no doubt play an ever-larger role in future vehicle construction, but critics say BMW has unwisely bet the farm on a market that doesn't really exist at the moment.

Ian Robertson, BMW's global head of sales, disagrees. "There are a lot of people who are going to take the step to alternative powertrains right now," he said. "We have seen a 20-fold increase in the number of people buying an electric vehicle in the last three years and I think we are at the tipping point right now."

As zero-emission zones become numerous in European and North American cities, one day you're going to find yourself driving electric or not at all. Certainly BMW leads the industry in manufacturing full carbon fibre vehicles. The question is whether the massive investment it has made to develop and commercialize the technology will allow it to hang on to the number one spot among its German premium brand competitors. Makes me want to go back to Frankfurt in two years to see what happens.