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Europe’s Electric Car Problem: High Prices, Lack of Choice Stifle Mass Adoption

AUTOMOTIVEEurope's Electric Car Problem: High Prices, Lack of Choice Stifle Mass Adoption

According to a report by Transport & Environment (T&E), only 17% of electric cars sold in Europe are compact vehicles from the cheaper B segment. From 2018 to 2023, only 40 fully electric models were introduced in the compact (A and B) segment compared to 66 large and luxury (D and E) models. The focus on large premium cars results in a high average price for electric cars, hampering their mass market entry.

On the European vehicle market, manufacturers are focusing on large premium models, rather than small, compact electric cars. Since 2018, manufacturers have introduced about 66 large premium models and slightly over 40 small cars. This is surprising because small models dominate the automotive market, accounting for about 80% of vehicles sold. However, their share in electric cars is significantly less,” says Anna Krajinska, a vehicle emissions and air quality manager at Transport & Environment.

From T&E’s analysis, only 17% of electric cars sold in Europe are compact cars from the cheaper B segment. In the segment of combustion cars, this percentage is 37%. The proportions are reversed in the D segment – 28% for electric cars and 13% for combustion cars. The focus on large SUVs and premium models means that there are too few cars for the mass market and prices are too high.

From the analysis of T&E production data conducted by GlobalData, it is shown that this year only 42,000 electric cars priced below 25,000 Euros will be produced for the European market.

“Consumers have a very limited choice, which also affects the availability of cars for buyers, as the focus on large premium cars keeps the average price of electric cars high. In the small car segment, competition is limited, which also contributes to maintaining high prices for small electric cars, the most compact ones,” assesses the expert.

The average European price for electric cars has increased by 18,000 euros since 2015. By comparison, in China, it has almost halved. There are 75 BEV models available for less than 20,000 euros in China, but only one in Europe. The average price remains high in Europe, even in compact segments: 34,000 euros (A), 37,200 euros (B) and 48,200 euros (C).

“It is very important to create a mass market for electric vehicles in Europe, to make electromobility available to everyone. Currently, we are faced with a situation where the average price of an electric vehicle in Europe is still very high and beyond the reach of less affluent consumers. It should not be the case that only the wealthiest or, for example, only residents of Germany or France can afford an electric car, but they should be within the reach of all European residents”, insists Anna Krajinska.

According to the consulting firm Syndex analysis leveraged by Transport & Environment, the biggest obstacle to buying an electric car in Europe is indeed its price. According to a YouGov survey, every fifth person intending to buy a new car this year will choose an electric one. Of those who stated they would most likely buy a combustion engine car, 13% said they would switch to electric if a small model worth 25,000 euros (110,000 PLN) hit the market.

“Premium cars have the largest margin and the highest prices. We observe that manufacturers are starting to see the disadvantages of this strategy because it means that there will not be enough buyers for the cars they produce. So, we see that manufacturers are slowly beginning to lean towards producing more affordable cars,” points out the expert.

In Europe, similar to the USA, one in eight new cars is electric. In China, as reported by HSBC, one in four cars is electric. By 2030, electric cars will account for 90% of the market there.

“In the Chinese market, much more affordable models are available, as car manufacturers cater to all market segments, not just the expensive premium cars that are the focus of European manufacturers’ attention. In China, 75 different car models are available for less than 20,000 euros,” emphasizes Anna Krajinska.

In Europe, cheaper compact models such as Renault 5 and VW ID.2 are expected to appear between 2024 and 2027. Citroën launched a small ë-C3 car for just over 23,000 euros in October, which should be available for sale by spring 2024. An electric car for less than 20,000 euros will be on offer by the beginning of 2025. This is a step in the right direction – hitherto in Europe only a few models are available below 30,000 euros.

“Our market is much more limited in terms of availability. It is very important that European manufacturers invest in the production of small cars to fill the gap we currently face,” convinces the manager for vehicle emissions and air quality at Transport & Environment.

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