Top Margin Menu

Europe’s Electric Car Revolution Demands Affordability But Paris Didn’t Oblige 

Europe’s Electric Car Revolution Demands Affordability But Paris Didn’t Oblige.

“Due to rising raw material and production costs, (prices) for electric vehicles are unlikely to fall in the medium term”

Europe’s electric car market looks very healthy at this early stage in its life, but long-term success requires cars and SUVs that are affordable for average wage-earners and there are few contenders at the Paris Motor Show.

The biennial Mondial de l’Automobile, opening October 17 after a 4-year absence because of Covid, offers little to the affordable electric car mass market, although there will be many expensive new battery electric vehicles, many of which, ominously, come from China. Some weird electric contraptions will also be on show, but their questionable safety, not to mention pedestrian performance, means they aren’t serious contenders. 

With forecasts suggesting up to 65% of new car and SUV sales in Europe by 2030 will be all-electric, it is vital that mass market sales are taken care of.  

(West European battery-electric market share has zoomed from 2.5% in 2019, to 6.7% in 2020, and 11.2% in 2021 when sales hit 1.2 million. Sales will advance to just under 1.5 million this year and just over 1.5 million in 2023, according to Schmidt Automotive Research.)

Auto industry consultancy JATO Dynamics said in the first half of 2022 the average price of a new battery-only electric vehicle was €55,821 ($55,000), up from €48,942 in 2015. Unless the European automotive industry makes and sells seriously cheap electric cars, average European citizens will be priced on to the bus. This will also expose the European industry, which is currently cashing in on European Union regulations. These rules spur the sale of high-priced, high-profit from the likes of Audi, Polestar, Mercedes and BMW, while making it impossible to produce small cars profitably. No doubt Chinese manufacturers will be casting a covetous eye at the low end.  

“In Europe, manufacturers have traditionally focussed production efforts on premium models and segments, within which price sensitivity is low, resulting in little progress in reducing EV prices across the market, and causing consumers to rely heavily on government incentives,” JATO said in a report. 

Professor Stefan Bratzel, director of the Center of Automotive Management (CAM) in Germany, expects this imbalance to continue as the price of crucial battery components trend in the opposite direction to affordability

“Due to rising raw material and production costs, it is unlikely that the acquisition costs for electric vehicles will fall in the medium term,” Bratzel said.

Evaporating advantages
And some of the advantages that electric cars could boast are evaporating too.

“The sharp rise in energy costs and electricity prices are critical in Germany (Europe’s biggest car market), which reduce the cost advantages of electric vehicles compared to combustion (ICE) engines. In addition to the sluggish development of the charging infrastructure, the rising acquisition and usage costs could jeopardize a rapid market ramp-up of electromobility,” Bratzel said in a report 

The European Union (EU) is forcing manufacturers to gradually end ICE car sales by making them unprofitable through ever-tighter carbon dioxide (CO2) emissions. Sales of new ICE cars will cease in the EU in 2035, and by 2030 in Britain. 

Carlos Tavares, CEO of Stellantis and its huge collection of automotive brands from the cheapest little Fiats to Jeeps and exotic Maseratis, has said if average citizens are priced out of new cars this could lead to social unrest.

“I can’t imagine a democratic society where there is no freedom of mobility because it’s only for wealthy people and all the others will use public transport,” Tavares said in a speech a couple of years ago.

With the market share of electric cars now at around 15%, affordability isn’t a problem. But as cheap, €12,000 ICE vehicles cease to become viable, the electric revolution won’t prosper until there is a price equivalent. Cynics say this won’t happen because EU politicians, saying the climate emergency demands it, really want to force mass-market drivers off the road and on to public transport or bicycles.

Mightily impressive but……
Meanwhile, the industry will continue to unveil mightily impressive but pricey battery electric vehicles (BEVs) at the Paris show. The little Renault 4ever compact electric SUV will debut, but although it’s small it won’t be affordable. New fancier electric vehicles include the Jeep Avenger and Fisker Ocean. Chinese manufacturers will be there in force and BYD will show the compact SUV the Atto, the Tang mid-size SUV and the Han midsize sedan. Great Wall will show its Ora Funky Cat, while Vietnam’s VinFast will showcase a couple of SUVs.

There will be some sops to affordability. Renault will update its tiny Twizy with the Duo, while visitors to Paris will no doubt raise their eyebrows when they see the little Citroen Ami quietly buzzing around town. Citroen won’t have a stand at the show. The recently launched Microlino from Italy, like the Twizy and Ami, is a so-called quadricycle, which means it only has to pass the safety test which applies to motorcycles. The Twizy sells at close to $12,000 in Britain after tax. The Ami is mainly leased. These vehicles are unlikely to appeal to current buyers at the low end of the market used to driving vehicles with impressive European safety ratings.

The only seriously affordable vehicle which is in fact a proper car is the Dacia Spring, where prices start at about €12,400 after tax in France ($12,000), but that’s after a government subsidy of around €6,000. Dacia is a subsidiary of Renault and is made in China.

JATO Dynamics sees little evidence this pricing problem will be solved in Europe and reckons this will open the door to the Chinese.

“Consumers are responding to the broader range of available EVs, however (the market) has failed to bring down prices to satisfy the demands of car buyers on lower and middle incomes. The risk for Western markets is further acceleration from China and newer emerging markets that could soon acquire a crucial portion of the market which has until now been dominated by the industry’s most established (manufacturers),” JATO said. 

The Paris Motor Show – Mondial de l’Automobile 2022 – “Revolution Is On”  – runs from October 17 through October 23 at the Paris Expo Porte de Versailles.


Print Friendly, PDF & Email

No comments yet.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Site Designed and Administered By Paul Cox Photographic