Generalist manufacturers have promised a democratization of the electric car with a new generation of connected city cars priced similarly to their thermal equivalent. But things get complicated…
Why haven’t you gone electric yet? Because it’s expensive? That’s an explanation we still hear a lot. And we cannot say the opposite. A Renault Zoé starts at 33,700 euros. That’s almost double the base price of a petrol Clio!
But the manufacturers have promised us change. To listen to them, the year 2025 will mark a turning point, with the arrival of a new generation of electric cars that will have to democratize this type of motorization. These are of course the most common city cars: Fiat Punto, Renault 5, Volkswagen ID.1… With these vehicles, the electric car will advance into a new sales dimension.
Finally economies of scale
And thus production volume. This aspect is one of the key elements for lower prices. Producing more logically means reducing costs. Especially for the electric car, the moment of economies of scale is finally arriving with the sharing of technical elements between models and brands. The very important initial investment is no longer made for small numbers, but for hundreds of thousands, even millions of vehicles.
All the groups have started developing modular bases in particular: MEB at Volkswagen, STLA at Stellantis, e-GMP for Hyundai/Kia… At Renault/Nissan there is the CMF-EV, inaugurated by Ariya and Megane E-Tech , and which will be used in 2023 for the new Scenic and replacement for the Leaf, then in 2024 for the Alpine crossover.
For its city cars, however, Allianz has taken a different economic decision: adapting the Clio’s CMF-B platform to electricity, making it possible to have common components for thermal and electric … and thus further increasing quantities. Renault has announced that this new CMF BEV base will cost 33% less than that of the current Zoé. This CMF-BEV has to equip 250,000 vehicles per year and is used by Nissan, Alpine, but also Dacia. For comparison: Renault assembled 70,000 Zoé in 2021.
The price of batteries is melting
The other very important element to make the electric car more affordable is of course the battery. Especially since an electric car is still so expensive for her! On this point, the corporations are counting on a sharp fall in prices. The Renault-Nissan alliance plans to halve that cost by 2026. And to reduce it by 65% by 2028. During its 2021 EV Days, Stellantis said its goal is to “further reduce the cost of EV module batteries by more than 40% in 2020-2024 and by more than 20% more by 2030.”
All the components of the battery packs are taken into account: the optimization of the entire module, the simplification of its format, the enlargement of the battery cells and the improvement of their chemistry. Example: In the United States, Ford just announced the introduction of lithium iron phosphate batteries alongside nickel manganese cobalt. Depending on the brand, these LFP batteries are 10 to 15% cheaper than the NMC.
Thanks to extensive work on the bases, motors and batteries, several manufacturers have set a symbolic goal for the future “popular” electric vehicle: 20,000 euros ticket, synonymous with combustion. If you think that 20,000 euros is still a lot, that’s already the price of a petrol city car with the right engine and equipment: a Clio equilibre TCe 90 hp costs 19,900 euros.
Can the electric car really become affordable?
The Covid and the war in Ukraine are calling everything into question
A price that will perhaps surprise some who have not noticed the increase in car prices in recent months. And here lies the big concern of some brands: the promise of an electric car from 20,000 euros is sometimes a bit outdated. And since the announcement effect, the Covid health crisis has generated an economic crisis and an energy crisis, compounded by the war in Ukraine in 2022.
Illustration of this trend: The cheapest electric car has become much more expensive in a few months! The Dacia Spring starts in spring 2021 at a price of 16,990 euros and now starts at 19,800 euros. Here it is already at the level of the symbolic threshold of 20,000 euros, which it could exceed in the next increase.
This increase is mainly explained by an increase in material prices. And the electric ones are doubly penalized since the increase in raw materials affects elements such as the bodywork but also the battery. According to AlixPartners, EV raw material costs increased by 123% between April 2021 and May 2022, mainly due to cobalt, nickel and lithium, while for thermal the increase is 91% in two years. Added to this are rising transport and energy prices…
The base price in trompe-l’oeil?
This seriously complicates the designer’s equation. Werner Tietz, vice president of research and development at Cupra, expressed concern about inflation. If this continues, it will be a problem to be able to offer electric cars for 20,000 euros.
Arnaud Ribault, head of Citroën at European level, recently declared to our colleaguesCoach “The work we’re doing now is driving the cost of cars down to offset the rising cost of raw materials and that of electrification.” So we need to look at all of the spending items.
And maybe shorten the technical data sheet? Because we must not deceive ourselves. If Renault hopes to have an entry-level R5 for €20,000, it certainly has a small battery. So if the Losange has already promised 400 km of autonomy with the CMF-BEV base, the cheapest of the R5 is said to have 200-250 km of autonomy. A double positioning that we already know from the electric Fiat 500 that exists with two batteries and two autonomies (190 and 320 km). The access R5 would thus replace the electric Twingo, which now starts at 24,050 euros.
Less battery life, faster charging
Being at €20,000 is possible, but with lower benefits. We imagine that an R5 with the configuration corresponding to the current Zoé, ie 110 hp and 400 km of autonomy, will be available at best for €25,000. Or the price of a Zoé… with the bonus. Because the other challenge for brands is to cope with the gradual elimination of state aid. In France, the bonus is set to increase to 5,000 euros in 2023 and 4,000 euros in 2024.
In general, manufacturers will limit the size of the batteries in their city and compact vehicles and demonstrate the pedagogy to customers: 400 km of autonomy, that’s enough for daily trips and weekend trips. Fast charging will be available for long journeys. You have to learn to use the breaks to recharge your batteries. With another challenge: to develop this network of fast terminals…
Volkswagen ID. Life: A compact electric SUV for 20,000 euros