Electric cars continue to be very expensive and often unaffordable for families. A discovery that could last in Europe.
This is a question that can cause controversy, are electric cars only intended for the richest families? With prices sometimes twice as high as those of thermal engines, electric cars continue to be, for most motorists, luxury products. A finding that the CEOs of European manufacturers do not rule out, who assume their elitist pricing policy on electric motors. But then, when will the electric car become cheap in Europe?
Electric cars, manufacturers assume their prices and denounce inconsistent policy decisions
Studying the different prices of electric vehicles in Europe, it is impossible not to be scared by the prices charged by different European manufacturers. With equivalent finishes, an electric motor is, in many cases, 6,000 to 10,000 euros more expensive than a thermal version. A finding that manufacturers do not refute. Better, they take over. So, in last Sunday’s joint interview given to our colleagues from ParisianCarlos Tavares and Luca De Meo, assume the elitist prices of their electric models.
Renault CEO Luca de Meo says: “We are still in a phase of technological advancement, during which, by definition, new products are expensive. Today, privileged people who have the means, garage and terminal at home can buy an electric vehicle. It’s politically incorrect to say so, but it’s the truth.”. Same observation for Carlos Tavares, CEO of Stellantis, who evokes “a problem of social stability” because of the prices of electric vehicles.
Words that leave little doubt, electric cars will remain expensive for years or even the next decade. If Luca de Meo guarantees that manufacturers “will be able to democratize the electric car”, the fact is that European manufacturers are not struggling to lower prices.
However, the electric car is becoming more and more democratic. As evidence, sales of electrified vehicles hit a new record this year in France, with a market share that surpassed the symbolic 20% bar. So why are electric cars so expensive? Simply because manufacturers had little taste for the decisions taken by European states about banning heat engines.
Many believe they were betrayed or ignored by the government. Automotive brands are thus forced to produce electricity, despite the colossal investments that this implies.
That’s why prices will remain so high for years to come. Manufacturers pass on their costly investments related to the transition to electricity in the prices of the different models. It is up to the States to assume the social discontent in relation to these tariffs. Thus, still in the interview given to our colleagues at Le Parisien, Carlos Tavares regrets that politicians have taken “the matter turned upside down, leaving aside the question of energy, and that of infrastructure”. Carlos Tavares also indicated at the beginning of the year that “electricity was the energy of choice for politicians, not manufacturers”.
ACEA was already warning about the price of electric vehicles in 2019
As a result, manufacturers don’t want to lower prices enough to make the electric car unaffordable for a long time. However, the subject is not new. In 2019, the ACEA (Association of European Automobile Manufacturers) indicated in a study, the correlation between vehicle electrification and GDP per inhabitant. It was thus noted that the richest countries in Europe were those where manufacturers sold the most electric cars.
Norway, Sweden, Holland or even Germany. On the other hand, the least wealthy European countries were those where electric cars sold the least. The study carried out in 2019 indicated that a Renault Zoé was twice as expensive as a Renault Clio.
Three years later, the situation has not changed. It even got worse. Because Covid is there and, above all, Europe is experiencing inflation that has a strong impact on the purchasing power of families. The gap between the price of electric vehicles and homes has widened even further. It is estimated today that the typical purchaser of an electric car is a person who lives in the city, class CSP+ and travels less than 10,000 kilometers per year. If these criteria are refined each year, the electric car is nevertheless aimed at the manufacturers’ wealthy customers.
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Will salvation come from Asian manufacturers?
So is the electric car destined to remain a vehicle for the rich? Not necessarily. The recent advance of Asian manufacturers in Europe is therefore reshuffling the cards. These manufacturers, often subsidized by their states, offer competitive prices. If prices remain high, the levels of finishes and equipment offered allow us to offer a very complete product. Most of these manufacturers have extensive experience with electric motors.
This spectacular advance in the European market could thus force the hand of other manufacturers to lower prices. Europe’s big brands also expect a bitter commercial battle in the coming months.
Another source of satisfaction for customers, basic models can be very interesting. Like the Dacia Spring, whose sales increased by 570% in the first half of 2022. It should also be noted that the various aid provided by European states also facilitate access to the electric car.
But the latter must remain an expensive product, to see very expensive, for the next ten years.
Please note that many electric car models will be on display at the Paris International Motor Show 2022. The cute little electric city car called Microlino from Micro Mobility Systems will be there. The same goes for the Avenger, the 100% electric urban SUV from the American automaker Jeep.