The European automotive industry could see a crucial turning point in production small electric cars “made in Europe” dal prezzo less than 25,000 euros. This is what emerges from a study conducted by Transport & Environment, an independent European environmental organisation. According to this study, the decrease in production costs and battery prices it would make it feasible to electrify the sector by 2025. And smaller models would be the ace in the hole to beat Chinese competitors.
Small electric cars under €25 thousand, the winning strategy for the EU
According to a scenario outlined in the study, by 2025, European manufacturers could achieve a margin of reasonable profit of 4% on the production of small electric vehicles. Especially thanks to the expected drop in battery costs of around $100 per kWh. In this scenario, the B-segment vehicle would be equipped with a 40 kWh LFP battery and would have a range of 250-300 km.
Currently, over a quarter of potential new car buyers in Italy (27%) intend to buy an electric car next year. However, by presenting the option of a small electric car at a price of 25,000 euros, the percentage of new buyers interested in purchasing a battery electric model increases to 38%. This change could lead to an increase in 136,000 electric vehicles sold per year in Italy.
More than half of electric vehicles are SUVs
However, according to Transport & Environment, some major European car manufacturers have abandoned the production of smaller, more economical cars favor of larger and more expensive vehicles. This trend has helped profits grow at a much faster rate than inflation. Between 2019 and 2022, net profits saw growth from a negative balance of -40 euros to 8,940 euros, taking inflation into account. SUV sales, which accounted for just 9% of the market in 2010, now make up over half (53%) of car sales in Europe. In particular, electric SUVs are worth 51% of electric car sales in 2022.
Carlo Tritto, Policy Officer of T&E Italia, explains: “More and more citizens will buy electric if smaller and more accessible models are available. But, unlike what has historically been the case in Italy, right now automakers are happy to push the large SUV market for profit, even if they are oversized vehicles that are too expensive for many low-income families. It would be time for legislators to intervene coherent policies capable of encouraging the spread of smaller, more efficient and accessible electric vehicles”.
The road to producing smaller, more affordable electric cars could be a return to the roots of the European automotive industry, while offering a solution to face foreign competition. The spread of affordable electric cars could represent an important step towards a more sustainable future and a more competitive European automotive industrya.