Renault CEO found the solution to reduce the price of electric cars

Renault group boss Luca de Meo says price parity between thermal and electric cars is far from a reality. But there are reflection paths to reduce the gap and, in particular, the integration of batteries with lower capacities.

Renault 5 // Credits: Marie Lizak

The electric car market is booming, that’s undeniable. And for good reason, sales have increased sharply across Europe, accounting for 21% of the market in August 2022, compared to just 11% in the same period last year. An increase, helped by tax aids such as the green bonus, helps to motivate customers, although this has been reduced or even abolished in some countries, such as the UK.

But electric cars are still very expensive, priced higher than thermal models. And the scale is not yet ready to reach equilibrium.

A parity that takes time to arrive

At least that’s what I think Luca de Meo, the head of the Renault group succeeding Carlos Ghosn. Present at the Paris Motor Show, the former CEO of Seat spoke about this matter to journalists fromautomotive news. For him, price parity between thermal and electric models is not yet a reality, and that should not happen anytime soon. Indeed, he claims that ” I don’t see this parity approaching“.

Renault 4 Ever Trophy // Credits: Marie Lizak

The price of electric cars is still very high compared to equivalent internal combustion models. A difference that we owe in particular to the cost of batterieswhile the boss said the auto industry had been expecting for eight years that the price per kWh of energy would drop by about $100 in five years.

Unfortunately, this is still not the case. However, according to a study by BloombergNEFthe average cost of lithium-ion batteries dropped by 6% between 2020 and 2021, from US$140 per kWh to US$132. This is then an 89% drop compared to 2010, whenyou had to count $1,200 per kWh at the time.

A seemingly simple solution

While experts even count on a potential increase in the price of electric cars until 2026, due to the increase in demand for raw materials such as lithium or cobalt, Luca de Meo underlines an important fact.

For him, offering models with large 150 or 200 kW batteries is ecological nonsense, as Ademe points out. Only reducing the size of these would make it possible to reduce production costs and, therefore, the selling price.. The future Renault 5 and Renault 4 are good examples, with batteries that do not exceed 50 or 60 kWh.

But for that, it will be necessary for the charging infrastructures and the network to follow, while France is still a little behind in this matter, even if it is part of the top 3 in Europe.

Source: Maria Lizak

In fact, with 71,630 charging points currently open to the public as of September 30, according to Avere-France, we are still a long way from the 100,000 charging stations promised by the government for the end of 2021. Let’s expect the network’s development to continue to accelerate, while the sale of thermal cars will be banned in Europe in 2035.

If Renault plans to become a 100% electric brand by 2030, Luca de Meo says that, ultimately, ” it will be the market, the customers, who will decide if they want to be exclusively electric“.

Another criterion to take into account

But if electric cars are more expensive to buy than equivalent thermal models, we must not forget to take into account another aspect that is often overlooked: the TCO (Total Cost of Ownership).

A calculation that integrates several aspects, such as the purchase price, but also maintenance, insurance or fuel expenses. While this varies by vehicle, an electric car is often priced lower, which helps offset the higher purchase price. In fact, in addition to the ecological bonus, the gray card is usually free and maintenance costs are lower. Plus, insuring an electric car would also cost a little less, while recharging remains much cheaper than a full tank of fuel, at least at home and for the moment.

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