The €20,000 ‘affordable’ electric car promise has crumbled

The downside of promising affordable electric vehicles at €20,000 is that the number remains. Disappointment is likely to be high, when the model actually hits the market, much more expensive than expected.

“Affordable” €20,000 electric vehicles are increasingly looking like a mirage. Every time you think about approaching it, the price moves away from what was initially announced. It has to be said that nothing in the current context seems to allow manufacturers to offer electric cars at this price, without relying on local help. It is through an interview in the German magazine Electrified that the new boss of Volkswagen, Thomas Schäfer, discusses the situation and the price of the future ID.2.

The Volkswagen concept is not the only one that can be affected, the electric Renault 5 finds itself in a similar situation, with, one can imagine, identical consequences for its future price.

The calculations are wrong

At the IAA fair in Munich 2021, Volkswagen presented its ID concept. Life, which has since become ID.2. The manufacturer then announced a model that would be positioned below €20,000 in 2025. This entry-level model should replace the role currently held by the VW e-Up!

VW ID.Life/ID.2 // Source: Volkswagen

We are still far from the 2025 deadline for its commercialization, but the calculations are already completely distorted. Even though they could still fall again by 2025, manufacturers are pretty pessimistic. Volkswagen CEO Thomas Schäfer confirms this regarding the ID.2 ads: If we look at the price increases, we quickly went from the desirable 20,000 euros to 25,000 euros. We will then see where we are exactly. »

If the increase in the cost of raw materials partly explains the situation, it is not the only element to be taken into account. When Electrified magazine asks whether a vehicle for less than €20,000 is still possible, Thomas Schäfer replies: “ With the current evolution of costs, it is certainly difficult to predict. This is not just about material costs, but also about labor costs. The two are going up in parallel. »

Cost of raw materials and energy, wages, inflation and shortages have frustrated the forecasts of the strategic plans of all manufacturers. They thought that manufacturing electric vehicles would cost less and less, through an economy of scale mechanism. At the moment, quite the opposite is happening.

renault_5_proto2
Renault 5 prototype // Source: Raphaelle Baut for Numerama

Electric car prices have increased by 15% in just a few months

In Germany, according to a study by the Automotive Research Center, prices for the 15 most popular electric models have risen by 14.5% since August last year. France should not be left behind on the issue of price increases for electric vehicles.

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Dacia Spring // Source: Dacia

Just look at the price evolution of France’s most affordable model, the Dacia Spring, to see it. When it launched in March 2021, the base model was priced from €16,990 (before bonuses), it now displays at €19,800. This represents an increase of over 16% in just over a year.

The Volkswagen e-Up is also shown from €25,400. The Renault Twingo ZE fares a little better with a base price of €24,050, while the entry-level was around €21,500 in 2021.

All brands raise prices more or less discreetly. By that logic, a concept car introduced last year for a price of around €20,000 will sell for at least €23,000 if it launches now, and certainly around €25,000 when it goes on the market.

Bad news for anyone who would like to find an affordable electric vehicle, as the second-hand electric vehicle market also suffers from this upward price trend. Even Chinese manufacturers do not dare to go far on the electric vehicle issue at less than €20,000 in Europe. It’s not a good sign.

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