The need to address the global climate crisis has rallied a growing number of governments around the world to embrace aggressive measures encouraging carmakers and drivers to embrace electric vehicle (EV) technology.
1. Small and affordable EVs
Barriers to EV adoption such as charging infrastructure, EV performance, availability and affordability, are still preventing the uptake of EVs in several markets. But an optimist study by Transport & Environment (T&E), based on analysis by the Syndex consultancy, reveals that, by 2025, carmakers can sell small electric cars made in Europe for 25,000 euros while making a profit. The study refers in particular to the feasibility of mass-producing B-segment vehicles and attributes such conclusions to the falling production costs and battery prices.
The “favourable market conditions” scenario shows that a small segment (B) BEV produced in Europe in 2025 can be priced at 25,000 euros with a reasonable 4% profit margin, T&E calculates, adding that the vehicle would have a 40 kWh LFP battery and deliver a range of 250-300 km.
“Survey after survey has shown prices are one of the biggest barriers to drivers going electric. The 25,000 euros small BEV will be a game changer for public adoption of electric cars,” said Julia Poliscanova, senior director for vehicles and e-mobility supply chains at T&E. “Bringing those models to market quickly and in volumes is crucial for European manufacturers to compete with Chinese rivals which are already offering cheap, small electric cars here,” she added.
2. SUVs flooding European roads
T&E said the availability of smaller, more affordable EVs could be a game changer for mass adoption of electric cars and crucial if European carmakers are to hold off the challenge of Chinese companies surging into Europe. But the automotive industry seems to be going in the opposite direction as T&E notes that “cars in Europe’s roads have become bigger”.
While the sales of SUVs of the six carmakers made up just 9% of new cars in 2010, by 2022, this figure has ballooned to 47% (and 53% for all car sales) and continues to grow today, according to T&E data.
“In public, automakers often blame the EU emission rules and changing consumer preferences. But on closer inspection it appears that their purposeful strategy to maximise profit per car is at play,” states T&E, noting that carmakers have stated at various investor days that SUVs are more profitable than non-SUVs. The campaign group asserted that the carmakers’ race for profits, rather than supply chain problems, are at the heart of making cars more expensive.
3. Keeping up with China
Despite the apparent feasibility from a technological and market perspective, it is not a guarantee that such small BEV models will be available on the European market at the speed and volume needed to accelerate access to electric mobility, T&E warns. “Speed and volume are paramount to compete with Chinese rivals which are already offering cheap small electric cars in Europe,” the campaign group states.
The environmental group ends the study with a recommendation for EU and national policymakers: “[we need] a joined-up strategy with measures at European (EV efficiency rules), national (vehicles taxes and subsidies that penalise weight) and local (weight-based parking charges) levels needed to ensure European automakers prioritise the production of smaller cars away from resource heavy and expensive SUVs.”