OEM focus on larger EVs 'hindering' EU adoption

Lack of availability in compact segments means cost-conscious consumers are not going electric

OEM focus on larger EVs 'hindering' EU adoption
BEVs have penetrated less in Europe than in China, where more cheaper, smaller models are available

Legacy OEMs are hindering EV adoption in Europe by prioritising sales of larger, more expensive electric cars, according to non-profit Transport & Environment (T&E).

The focus of European manufacturers on large cars and SUVs, which carry a price premium, has led to the average price of a BEV in Europe increasing by 39pc to €68,023 ($73,900) since 2015, according to T&E.

“European carmakers are holding back the mass market adoption of EVs by not bringing affordable models to consumers,” says Anna Krajinska, vehicle emissions manager at T&E. “The disproportionate focus of manufacturers on large SUVs and premium models means we have too few mass-market cars and too high prices.”

In Europe, 28pc of electric sales are in the large car D segment, compared to just 13pc of new combustion cars. Just 17pc of electric cars sold in Europe are compact vehicles in the cheaper B segment, compared to 37pc for ICE vehicles, according to T&E’s analysis of 2023 sales figures from Dataforce.

Only 40 fully electric models were launched in the compact segments (A and B) in Europe between 2018 and 2023, compared to 66 large and luxury models (D and E), the report finds.

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Chinese challenge

In sharp contrast, in China there are 75 BEV models available for less than €20,000, compared to only one in Europe. 

This has contributed to a higher market share for BEVs in China, where they formed 24.7pc of new car sales in 2023, growing from 21.3pc in 2022. In contrast, the market share of BEVs in the EU increased to only 14.6pc in 2023 from 12.1pc in 2022. 

“High prices mean BEVs are not cost-competitive for cost-conscious European consumers since there are many ICE models available for below €20,000 such as the Citroen C3 or the Seat Fabia,” the T&E analysis concludes. 

There have been some announcements by European carmakers that cheaper compact models — such as the Renault 5 and VW ID.2 — will be launched in coming years. indeed, the B segment in Europe is likely to get increasingly crowded in years to come

But T&E notes that less than 50,000 of these cars are expected to be produced for Europe in 2024, which ma be unable to satisfy potential demand.

Policy recommendations

Inadequately stringent CO2 targets in the EU until 2025 have allowed carmakers to prioritise the premium and large segments, T&E says. Under EU rules, automakers are required to reduce fleet average CO2 emission by 15pc by 2025 below 2021 levels.

Although it is too late to revise the 2025 target, it is important that the 2030 target for a 55pc reduction should not be re-opened and watered down, as some have suggested, T&E advocates.

Furthermore, the European Commission should propose an EU regulation to electrify all new sales of corporate fleet cars by 2030 and set earlier targets for big fleets, the non-profit recommends. 

Currently corporate EU BEV sales are at a 14pc market share — below the 15pc share in the private segment. 

"The low BEV uptake in the corporate car segment is holding back the European BEV market,” says the analysis. “This is due to poor national company car taxation policies in many member states and lack of EU policies that would drive corporate fleet electrification.”

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