As per a report from consulting company JATO Dynamics, Europe’s market for small electric vehicles will be controlled by China unless the European Union (EU) takes swift action to allow makers to offer cheap vehicles for the bulk market profitably.
In Europe, the market for electric vehicles has grown rapidly in recent years but from an extremely low base. As per Schmidt Automotive Research, EV sales in Western Europe in the first half of 2020 were 483,304, up 124 percent from the very first half of 2020. However, the market share just was over 4%. These sales have primarily been of high-end, high-priced vehicles, with small electric vehicles at the entry-level still costing roughly three times as much as ICE equivalents.
Sales are also heavily reliant on government subsidies, with tax-payer handouts in Germany reaching nearly $12,000, though this does not apply to luxury vehicles. In comparison to China, electric car pricing has shifted on the contrary direction in the United States and Europe.
“While EV prices in China have decreased by 47 percent since 2011, EV prices in the United States and Europe have increased by 38 percent and 28 percent, respectively,” according to the report.
“Today, Chinese consumers can purchase a brand-new electric vehicle for as minimal as $4,400. In direct contrast, the average retail cost for an electric vehicle in the United States continues to rise quicker than in any other significant international market, now standing at $42,800, up from $31,000,” as per the report titled “EVs: A Pricing Challenge.”
In the United Kingdom, the average retail cost of an EV is 52% higher than the average ICE price. The typical EV retail price in Germany is $47,000.
Electric cars currently on the market in Europe are primarily overpriced city cars. They are out of reach for the average person, and their long-range capabilities are easily surpassed by the cheapest diesel or gasoline vehicle. As a result, they rely heavily on government subsidies to move metal. The electric car revolution urgently needs affordable automobiles that will sell based on their utility and affordability alone.
Volkswagen sustainability advisory board member Ye Qi is quoted in the paper as saying that if European and American manufacturers do not address the price issue, they would be in trouble.
“They fear losing the home market edge to Chinese competition unless they make more inexpensive EVs,” Qi warned.
Over the horizon, challengers are preparing to launch a mass-market assault on Europe. The FreZe Nikrob EV, a European version of China’s popular Hongguang MINI EV, has already begun selling in small quantities in Spain, Italy, and France, thanks to a partnership between General Motors GM -0.4 percent, China’s SAIC SAIC -0.1 percent, and Wuling.