October 16, 2021

Unless the EU takes action, China may be able to take Europe’s mass market for electric vehicles

2 min read

According to a forecast by consultancy JATO Dynamics, Europe’s market for tiny electric cars would be controlled by China unless the European Union (EU) takes rapid action to allow makers to supply cheap cars for the mass market profitably. In Europe, the market for electric vehicles has grown rapidly in recent years but from a relatively low basis. As per Schmidt Automotive Research, EV sales in Western Europe in the first half of 2020 were 483,304, up 124 percent over the first half of 2020. However, the market share was barely over 4%. These sales have primarily been of high-end, high-priced automobiles, with little electric vehicles at the starting level still costing almost three times as much as ICE equivalents.

Sales are also strongly reliant on government subsidies, with tax-payer payments in Germany reaching around $12,000, albeit this does not apply to premium vehicles. In comparison to China, electric vehicle pricing has shifted in the opposite way in Europe and the United States. “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 buyers can purchase a brand-new electric vehicle for as minimal as €3,700. In striking contrast, the average retail price for an electric vehicle in the United States continues to climb faster than in any other major worldwide market, now standing at €36,000, up from €26,200,” according to the paper titled “EVs: A Pricing Challenge.”

In the United Kingdom, the average retail cost of an EV is 52% greater than the average ICE cost. The average Electric Vehicle retail price in Germany is €39,755. Electric automobiles currently on the market in Europe are largely 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 largely on government subsidies to move metal. The electric vehicle revolution urgently needs cheap automobiles that will sell on their own merits, such as utility and cost.

According to the article, Ye Qi, a member of Volkswagen’s sustainability advisory council, European and American manufacturers will have difficulty if they do not address the price issue. “They fear losing their home market edge to Chinese competition unless they build more affordable EVs,” Qi warned.

Over the horizon, there are challengers ready to launch an assault on Europe’s mass market. The FreZe Nikrob EV, a European counterpart 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 0.0 percent of the U.S., China’s SAIC SAIC -1.7 percent, and Wuling.

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