There are no cheap electric cars yet, there are few new models under 30,000 euros, but everything will change quickly, as European countries will reduce subsidies or even refuse them. European manufacturers are also gearing up to launch sub-€20,000 electric cars as competition from China gets tougher, with models that look good, have good quality and are packed with technology. Can such cars be built more cheaply?

Chinese competition and reduced subsidies are forcing European builders to lower prices

We are seeing more and more electric cars on the streets. Last year was a record year for electric cars in Romania, with more than 15,000 new cars sold, a 32% increase over 2022. More than 6,800 Dacia Spring, 3,200 Tesla, 1,400 Volkswagen and more than 900 Renault vehicles were sold.

The first fully electric cars were released in Europe in 2010, and 3-4 years ago there were almost no models with a price below 30,000 euros. This price was and remains high for 95% of potential customers, especially since there is another big limitation: rather low autonomy.

For a long time, the auto industry focused on increasing the autonomy of electric cars, but in recent years the goal has become clear: to reduce the cost of production, because subsidies given in Europe are reduced and the Chinese come with better and better prices. At any meeting of a major European manufacturer, there is a clear desire: How do we reduce the cost of electricity production?

Tesla Motors has cut the prices of its cars several times in the past two years, most recently in Germany, where prices fell by €5,000 to compensate for the German state’s sudden end to electricity subsidies. And other manufacturers compensated for this with discounts so that sales did not fall sharply. But other price drops have to do with manufacturing, battery chemistry and design.

In the last months of 2023, everything has changed a lot, and the pressure on manufacturers to bring cheaper electric models to the market (and to reduce the prices of existing ones) is coming from two sides: Chinese competition and the tendency of many EU countries to reduce subsidies for the purchase of electric cars. In a few years, most countries will stop providing government subsidies.

The prospect of more affordable electric cars is closer than ever, especially as many European manufacturers know they must offer European-made models at lower prices than in the past to avoid being “penalized” by Asian components.

Electric cars had a record year in the EU, surpassing 1.5 million units for the first time, of which almost 300,000 were Tesla Motors. Compared to 2022, the increase was 400,000 units. Germany was the largest market with 524,000, while France finished with 298,000. The Netherlands came in third with 113,000 vehicles.

There are more than 40,000 electric cars on the streets and roads of Romania, of which 16,000 arrived last year. Almost 40% of electric cars in Romania are Dacia Spring, and other models that are doing well are Tesla Model Y, Renault Zoe and Tesla Model 3.

Everyone’s goal is an electric city that costs less than €20,000, has plenty of space inside and is “made in Europe”

The promise of a certain car model excited electric fans. In October 2023, Citroen announced the launch this year of a new electric model of the small class e-C3, which will be available from 23,300 euros in a version with a mileage of 320 km. From 2025, a variant with a range of 200 km will also appear on the market, priced at 19,900 euros, which means that it will be the cheapest electric car of the European brand. The car will be manufactured in Slovakia.

Renault announced in November that it will use the Twingo name for a small electric city model that will be built in Europe and launched in 2026 at a price below €20,000. The company promises to reduce production costs to be able to sell the car at this price, and will insist on optimizing the battery. Most likely, the car will be produced at the Renault plant in Slovenia. Renault will also launch the Renault 5 this year, which will be bigger and better than the new Twingo, but will cost around €25,000.

The model, which can be sold in large volumes, will also be the smallest electric model in the Volkswagen ID range. It should be introduced in mid-2025 and will reach the first customers in early 2026 under the name ID 2. The aim is to have a starting price of less than 25,000 euros for this model, but whether this will be possible remains to be seen. .

In the summer of 2024, the Stellantis group will release an electric version of the Fiat Panda, which will be produced in Serbia and will cost less than 25,000 euros. On a platform called Smart Car, models of the same type could be launched for the Opel and Peugeot brands, and costs would be lower, as many components would be shared between models from different brands within the group.

Both Hyundai and Kia will produce electric city cars that will cost less than €25,000, but the most interesting thing is that there have been reports in the press that Tesla would also like to release a model at that price, although it was long believed that that something is impossible, especially since there is no Tesla model below 45,000 euros. A sub-€30,000 Tesla model made in Germany would sell very well, especially since it had decent range.

Dacia Spring, produced in China, is the cheapest electric car on the EU market with a starting price of around 20,500-21,000 euros. Several manufacturers have promised larger electric models with more interior space and better autonomy, but such models will have a starting price somewhere around 20-25,000 euros, before government subsidies are applied.

There will be many interesting models, the Dacia Spring will get a facelift in 2024, and by 2027 or 2028 the electric Sandero should also be on the market. There are no plans for an electric Duster, especially since it will cost a lot, and the classic Duster can cost more than €25,000, so the electric Duster will be well above that price.

In the cheapest versions, these electric city cars won’t have many options, they probably won’t have large touchscreens on board, the back seat probably won’t fold, and the battery won’t be too big.

If in 2023 you could buy an electric car in the EU with subsidies of between 5,000 and 10,000 euros, we can imagine that in 2026 or 2027 the subsidies will be at best 2-3,000 euros on models produced in the EU. And Romania, which offered about 9-10 thousand euros for an electric car, decided to reduce subsidies, which for Rabla Plus 2024 will amount to about 5 thousand euros.

How electricity can become cheaper – The battery problem is not easy to solve

The battery is the main obstacle to making EVs cheaper in the future, the average price of a battery has fallen significantly compared to a decade ago (more than six times the cost of a kWh), but this decline has not occurred at a rapid pace in recent years.

It is not known how much an electric car battery costs, as purchase prices are not made public, but estimates indicate prices of 4-5,000 euros for the smallest electric ones and more than 25,000 euros for expensive and long-range batteries. electric cars

Currently, many companies are working on the production of batteries that cost less, but provide better autonomy.

Some companies are testing lithium-iron-phosphate battery technology, which uses fewer expensive and hard-to-find materials. It is believed that these batteries can have a longer life and a lower risk of fire.

These “Lithium Iron Phosphate” (LFP) batteries do not require nickel, manganese or cobalt, ingredients that are sometimes difficult to find or become more expensive.

And if the average price of building a car was 3-4000 euros lower, it would still be a very positive point. A lot of work is being done on solutions to reduce battery weight, and if you can achieve 10-15% battery “lightness” while maintaining the same range as before, it will be good for the price. The lightest batteries available in electrics weigh somewhere under 300 kg, but the heaviest exceed 700 kg.

And sodium-ion batteries could be the solution, and car companies are investing in various suppliers testing new types of battery chemistries to help those suppliers more quickly develop these batteries, test them and, if things look good, install them in cars in the coming years .

Battery costs can also be reduced by changing their design, for example choosing to make the battery consist of fewer larger cells instead of more, but each one smaller. Fewer components in a battery can mean lower assembly costs and lower component costs.

The main raw materials for battery production are lithium, cobalt, nickel, manganese and graphite, and the big car companies have also struck deals with the biggest mining groups to ensure they have access to the “ingredients” needed to make the battery.

More investments have been announced in factories for the production of batteries for electric vehicles in countries such as Germany, Hungary, Spain or Slovakia.

From 2027, it is planned that electric vehicles sold in the EU will have a so-called “battery passport” containing data on the origin, production of the battery and the raw materials used. This passport will be in the form of a digital document that can be scanned to provide more information about where the battery was manufactured, its capacity and condition.

Special alliances and smaller batteries

The largest European manufacturers have joined forces with major battery manufacturers and are jointly building battery factories in Europe. In this way, the big car companies guarantee that they will always have a supply of batteries for their cars, and in the case of batteries made in Europe, the financial “penalties” that will be increasingly present in the case of batteries made in China will increase. do not appear.

A strategy that has already been used for some time and will be more and more present on the market, will be to put a low-capacity battery on the basic version, and on the version that is several thousand euros more expensive, install a battery that allows a much greater autonomy. Various statistics provided by car manufacturers show that a city car is used for about 30-40 km/day, the idea being that the reduced range should not be a problem because it will be enough to charge it once every few days.

Any customer who wants to get a 100% electric car has to do one clear thing: a lot of documents and a lot of calculations, because if you don’t have a big budget, you shouldn’t buy a car with much more autonomy than you need. If you don’t drive far, you don’t have to pay 40-50 thousand euros for a car with a range of 350-450 km, and you can pay much less.

The number of charging stations is also expected to increase in the future, so the reduced range of a €20,000 electric car won’t be such a big deal if you find it easier to find an outlet. Another positive point is that the number of fast charging stations will also increase, but it remains to be seen whether this increase will keep pace with the increase in the fleet of electric vehicles.

The EU and major European countries have declared “war” on Chinese-made electric vehicles. The European market is “flooded” with Chinese-made electric cars, where companies receive large subsidies from the state, subsidies that allow companies to sell these cars in Europe at abnormally low prices. Based on this idea, the European Commission will start an investigation, Ursula von der Leyen said in September.

The EC president said the EU car market is distorted by these cars made in China, which are sold at prices artificially reduced by the generous subsidies received by companies in China.

Several countries are discussing the idea of ​​offering subsidies only for electricity produced locally or for electricity produced in the EU.

Sources: Automotive News, Autocar UK, Reuters, AFP, Le Monde, New York Times, Just-auto.com, TechCrunch

Photo source: Dreamstime.com