Can an electric car really be cheap?

Can an electric car really be cheap?

The mass producers have promised the democratization of the electric car and a new generation of connected city cars at the same price and equal to their heat. But things get complicated…

Why haven’t you used electricity yet? Because it is expensive? This is a description that we still hear over and over again. And we can’t say the opposite. Renault Zoé starts at €33,700. That’s almost double the price of a base Clio for petrol!

But the developers have promised us a change. To listen to them, the year 2025 will mark a turning point, with the arrival of a new generation of electric vehicles that must democratize this type of motorization. In fact these are mostly city cars: Fiat Punto, Renault 5, Volkswagen ID.1… With these cars, the electric car will enter a new direction in terms of sales levels.

Finally, economies of scale

And so the number of productions. This feature is one of the most important features to reduce the price. Producing more logically means reducing costs. Above all, for the electric car, the time of economies of scale is finally coming, and the sharing of technical features between models and between products. The initial, very important investment is no longer made in small amounts, but in hundreds of thousands, even millions of cars.

All groups have started the development of modular bases: MEB at Volkswagen, STLA at Stellantis, e-GMP at Hyundai/Kia… At Renault/Nissan, there is CMF-EV, launched by Ariya and Megane E. -Tech, and which will be used in 2023 for the new Scenic and Leaf replacement, then in 2024 for the Alpine crossover.

For its city cars, the Union has however made another economical choice: adapting Clio’s CMF-B platform to electricity, which makes it possible to have conventional fuel and electric components… and therefore further increase the volume. Renault has announced that this new base CMF-BEV will cost 33% less than the current Zoé. This CMF-BEV must have 250,000 vehicles per year, used by Nissan, Alpine, but also Dacia. By comparison, Renault assembled 70,000 Zoé in 2021.

Melting battery prices

Another very important aspect of making an electric car more affordable is obviously the battery. Especially since it is because of him that the electric car is still very expensive! At this point, groups are betting on a sharp drop in prices. The Renault-Nissan alliance plans to halve this cost by 2026. And reduce it by 65% ​​by 2028. During his EV Days in 2021, Stellantis said that his goal was to “reduce the cost of electric vehicle battery modules by more . more than 40% in the period 2020-2024 and by more than 20% more by 2030”.

To do this, all aspects of battery packs are taken into account: optimization of the entire module, simplification of their design, increase in the size of battery cells and optimization of their chemistry. Example: in the United States, Ford has announced the arrival of lithium-iron-phosphate batteries, as well as nickel-manganese-cobalt. Depending on the brand, these LFP batteries will be 10 to 15% more expensive than NMC.

Thanks to the great work on bases, motors and batteries, several manufacturers have set themselves a model goal for the “popular” electric car of the future: an entry ticket of € 20,000, similar to combustion. If you find that €20,000 is still a lot, that is already the price of a petrol city car with the right engine and equipment: the equivalent Clio TCe 90 hp is €19,900.

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Covid and the war in Ukraine cast doubt on everything

A price that will probably surprise others, who have not noticed the rise in car prices in recent months. And here is a big concern for other products: the promise of an electric car from €20,000 is sometimes dated. And since the impact of the announcement, the health crisis of Covid has created an economic crisis and an energy crisis, these will be intensified in 2022 by the war in Ukraine.

Illustration of this situation: the cheapest electric car has become more expensive in a few months! Launching in Spring 2021 at a price of €16,990, the Dacia Spring now starts at €19,800. Here it is already at the symbolic threshold level of € 20,000, which can be crossed during the next increase.

This increase is mainly explained by the increase in the price of equipment. And the electric ones are punished twice, since the increase in raw materials affects things like body work, but also the battery. According to the company AlixPartners, the cost of raw materials for electric vehicles increased by 123% between April 2021 and May 2022, due to cobalt, nickel and lithium, while the increase of fuel is 91% in two years. In addition to this, the increase in transport and energy prices…

The basic price in trompe l’oeil?

This greatly complicates the builder equation. Werner Tietz, Cupra’s vice president of research and development, expressed concern about inflation. If this continues, it will be a problem to be able to offer electric cars at a price of €20,000.

Arnaud Ribault, head of Citroën at the European level, announced recently to our colleagues fromCoach “The work we are doing now is to reduce the cost of cars to compensate for the increase in the cost of raw materials and that of electricity”. So we’ll have to look at all the consumables.

And maybe reduce the technical paper? Because we shouldn’t fool ourselves. If Renault hopes to have an R5 for 20,000 € at the entry level, it will certainly have a small battery. So, if Losange has already promised 400 kilometers of autonomy with the CMF-BEV base, the more affordable R5 should have 200 to 250 kilometers of autonomy. Two positions that we already know and the electric Fiat 500, which exists with two batteries and two autonomy (190 and 320 km). The Access R5 will therefore replace the electric Twingo, which now starts at €24,050.

Less battery life, faster charging

Being €20,000 is possible, but with low benefits. We think that the R5 with the same configuration as the current Zoé, i.e. 110 hp and 400 km of autonomy, will be better at a price of 25,000 €. Or the Zoé price… with a bonus. Because another brand challenge is dealing with the suspension of government aid. In France, the bonus should increase to €5,000 in 2023, and indeed to €4,000 in 2024.

More generally, with their city and small cars, in order to have a price, the manufacturers will have the size of the battery, and they will show teaching and customers: 400 kilometers of autonomy, that is enough for daily trips and weekend breaks. For long journeys, there will be faster payments. You will have to learn to take advantage of breaks to re-juice. And another challenge: to develop this network of fast stations…

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