European car makers slow transition by failing to make affordable EVs

Despite strong economic headwinds, the European demand for electric vehicles (EVs) remains strong, but Western carmakers are hindering future EV uptake by focusing on larger and expensive models rather than more affordable EVs.

This is particularly damaging to potential EV uptake when taking into account carmaker’s continued efforts to sell affordable internal combustion engine (ICE) models, which are significantly outpacing the availability of comparable EV models.

A new analysis of European car sales in 2023 published Monday by Transport & Environment (T&E), Europe’s leading clean transport campaign group, shows that sales of battery EVs (BEVs) in Europe increased by 28% in 2023, pushing the market share of BEVs to 14.6%.

Growth has slowed, however, compared to the rapid uptake of BEVs seen in 2020 and 2021, which was driven in part by more stringent car CO2 standards.

Moreover, European BEV sales in 2023 were well behind China, which saw BEVs account for 24.7% of all car sales, up from 21.3% in 2022.

Despite global comparisons, Western carmakers have been citing low consumer demand for BEVs, with some carmakers like Stellantis or Volkswagen seeing their BEV sales stagnating, and some companies like Renault, Ford, and Jaguar Land Rover seeing their BEV sales decreasing.

T&E’s analysis, however, demonstrates the misleading nature of these claims, by comparing which vehicle segments have been prioritised by European carmakers.

It says that since 2018, European carmakers have launched only 40 BEVs in the smaller and more affordable A and B segments, compared to 66 vehicles in the larger and more expensive D and E segments.

The resulting impact in BEV sales is demonstrated by comparing the market share divergence of compact B and large D segment cars between the BEV and ICE markets.

In 2023, ICE models in the compact B segment were responsible for 37% of all ICE sales, but BEVs accounted for only 17% of all BEV sales. Conversely, BEV sales in the D segment accounted for a market share of 28%, whereas ICE segment D sales only accounted for 13% of all ICE cars sold in 2023.

“By prioritising new BEV models in the more premium D and E sizes, carmakers are slowing down the BEV mass market to maximise their short-term profits.”

This focus on larger and more expensive BEV models is similarly demonstrated in the average BEV price. In China, for example, the average BEV price has fallen by over 50% since 2015, thanks in part to a greater prioritisation on affordable mass market BEVs and supply chain integration.

In comparison, the average European BEV price has increased €18,000. The average BEV price also remains high even in the compact segments: €34,000 in segment A, €37,200 in segment B, and €48,200 in segment C.

The difference is even starker when looking at available models: In China, there are 75 BEV models available for less than the equivalent of €20,000 (around $A33,000, converted). In Europe, there is only one model available at the same price point, but many ICE models available for under €20,000, all but making the choice for cost conscious consumers.

These figures – while representing a greater availability of BEVs – also paint a similar picture here in Australia, where the cheapest BEV is around the $40,000 mark – well above what many Australians can even contemplate paying for a new car.

The future does not look much different, either, with only 42,000 vehicles under the €25,000 price point set to be manufactured in 2024.

Unsurprisingly, many Chinese brands are looking to Europe to expand their market and are planning to deliver more affordable BEVs.

T&E therefore believe a number of new European Union and national policies are necessary to both increase availability of affordable BEVs while also maintaining local car manufacturing jobs and businesses.