Less is hard

When will affordable electric cars finally arrive?

(Bild: APA/AFP/STR)

The electric revolution has come at a high price: The industry has invested heavily, the state has subsidized it and we have paid high prices. But it is slowly becoming cheaper, at least for customers. Because the first accessible electric cars are slowly arriving. But how sustainable is the business?

The cheapest new car in Austria currently costs 11,900 euros and is completely suitable for everyday use. With a length of 4.09 meters, the Dacia Sandero offers more or less enough space for children and family and can travel over 900 kilometers. However, it runs on fuel and not electricity. If you need a new car for little money, you are technically trapped in the past and still excluded from the mobility revolution: Electric cars are significantly more expensive, especially if they are to meet comparable requirements.

Prices here - also from Dacia - start at 18,990 euros (or 13,590 euros with the subsidy deducted) and the Spring, which is just 3.73 meters short, is still far from being equipped for everyday use as a first car. This is because it gets quite cramped at the back and has to be taken into the pits after 225 kilometers at the latest.

Combustion engine under 1000 euros
"It's just damn hard to build an affordable electric car, let alone a cheap one," says Arthur Kipferler. "Because where the three- or four-cylinder engine of a small car costs manufacturers less than 1000 euros at best, even a small battery is quickly on the books at 6000 euros," explains the partner at strategy consultant Berylls by AlixPartners in Munich.

But because the material value of a car should be around 40 percent if it is to make a profit in the end, there is not much left for the rest, explains Kipferler, which is why so many even halfway affordable cars look so cheap and loveless.

But things are slowly changing
After the manufacturers have so far rolled up the market from the top because they could hide the high costs better with expensive cars and could hope for customers willing to experiment, there has been movement in the lower price segment for a few months now. The Dacia Spring and its slightly more refined brother Renault Twingo will soon be joined by the Leapmotor T03 as a price breaker from China at around 18,900 euros, and since Citroen launched the C3 in the summer for at least 24,900 euros, European electric cars are suddenly also considered affordable.

Especially as the Citroen is not alone. Within the Stellantis family, Fiat with the Grande Panda and Opel with the Frontera want to try their luck on the same platform at a similar price, and after starting with the more upmarket variants, Renault's competitors are also bringing the R5 below the pain threshold of 25,000 euros in the new year. They are also working on the successor to the Twingo, which should then no longer cost 20,000 euros.

Even the VW Group has now got the idea and is preparing a family of new Volkswagens around the ID.2 at popular prices, which will also have offshoots at Skoda and Cupra.

And then there are the Chinese
There are already dozens of cars in China, all of which are cheaper than the Dacia Spring here. But they have not yet made it to Europe. Firstly, they often do not meet local standards, secondly, they do not promise the same returns as high-end exports such as BYD and thirdly, the low prices often cannot be maintained due to logistics and registration requirements, according to analysts. "But sooner or later, we will see cars like this here too," Berylls by AlixPartners partner Jan Burgard is convinced.

European manufacturers are therefore well advised to cut costs themselves and can use several levers to do so. They are cutting back on the format and focusing on small and micro cars again. They save on the drive system and install small batteries or slow chargers. Or, like Dacia with the Spring from China or Fiat with the Grande Panda and Citroen with the C3 from Poland, they are relocating production to countries with lower labor and energy costs. As Opel CEO Florian Hüttl has just made clear in an interview, it will not be possible to produce cheap e-cars in Germany in the foreseeable future with the current cost structures. No wonder the Frontera doesn't come from Rüsselsheim or Eisenach, but from Slovakia.

Green wave for electric cars?
Price breakers from China and affordable small cars from low-wage European countries - will this be the long-awaited breakthrough for electric cars? Kipferler is not quite so optimistic. "After all, the high price is only one hurdle," says the Berylls expert. Just because the cars might become cheaper does not dispel the range anxiety, nor does it make charging easier: "Especially in this price segment, very few customers are likely to be able to charge at home or at work and are therefore particularly dependent on an infrastructure that still needs a lot of optimization. "What's more, an electric car for 25,000 euros or less is still not a cheap car. Because the competition is not the electric car for 40,000 euros, but the petrol car, which is already available for 15,000 euros."

So while customers may continue to hesitate, the pressure on manufacturers is growing. The fact that so many cheap e-cars are now coming onto the market is only partly the reward for the long development work and steep learning curve of recent years. It is also due to the threat of fines that Brussels will demand from the new year if companies fail to meet their CO2 targets. "And every approval counts," says Kipferler. That's why manufacturers and importers are pushing e-cars onto the market come hell or high water. "Only as many as they need for their carbon footprint, of course," says Kipferler, referring to precisely calculated "compliance registrations": "Even if they earn less from them."

Or perhaps even make a loss. "Because at the end of the day, it's still better to make a loss than to pay a fine," says the expert. "For the image and, secondly, for progress. After all, the money is better invested in development and production than in the EU coffers." And if at some point the knot does burst, the prices for the components tumble or someone invents the miracle battery, they will be right in the game. If only someone knew when this game would begin. (Benjamin Bessinger/SPX)