The affordability of electric vehicles has become a key topic in recent years, especially as Chinese automakers begin to make inroads into Europe with brands such as MG (owned by SAIC) and BYD. The issue could escalate into a full-fledged dispute as the EU announced this week it would investigate China's domestic subsidies, which critics say give cars built there an unfair advantage.
“Survey shows cost is a key barrier to faster adoption of BEVs (battery electric vehicles)», — Julia Poliscanova, senior director of vehicles and electric vehicle supply chain at T&E, said in a report published Thursday.
There is also a wide gap in the adoption rate of electric vehicles, with poorer countries in southern and eastern Europe lagging far behind countries such as Norway, Germany, the Netherlands and the UK.
The EU requires that after 2035 automakers sell exclusively vehicles with zero emissions. Currently, the market share of electric vehicles in Europe is around 15 percent, with a significant jump expected only after 2025.
Electric cars costing less than 25,000 euros have become a target of automakers and experts, who say such a price will make electric cars accessible to many more buyers, accelerating the transition to climate neutrality.
“The small €25,000 BEV will be a game-changer in public acceptance of electric vehicles,” — Poliscanova said in the report. “Bringing these models to market quickly and in large volumes is critical for European manufacturers to compete with Chinese rivals who already offer low-cost small electric vehicles here.”
The T&E report states that “subject to favorable market conditions” a small electric car produced in Europe in 2025 could cost €25,000 with a profit margin of 4 percent, similar to the margin of a small internal combustion engine car. It will have a 40-kilowatt-hour battery using cheaper lithium iron phosphate (LFP) technology and a range of 250 to 300 km.
Currently, the cheapest electric car in Europe is the Chinese-built Dacia Spring, which starts at €20,800 in France. Thanks to government support, this figure is reduced to less than 16,000 euros.
Stellantis plans to sell the small Citroen New e-C3, made in Slovakia, for 25,000 euros starting in 2024, and Fiat will introduce a new electric model, inspired by the Panda hatchback, in July 2024, Fiat brand CEO Olivier Francois said in an interview. The Volkswagen Group will release the small ID.2 hatchback in 2025, with a starting price of less than 25,000 euros.
In order to give preference to small cars over “heavy and expensive” ones, SUVs, T&E called for comprehensive efforts, including national vehicle taxes that penalize weight, as well as increased parking fees based on weight. Measures should include stricter electric vehicle efficiency regulations, taxes and subsidies.