Can the electric car really become affordable?

Generalist manufacturers have promised a democratization of the electric car with a new generation of connected urban cars at prices similar to their thermal equivalent. But things get complicated…

Why haven’t you gone electric yet? Why is it expensive? This is an explanation that we still hear often. And we cannot say otherwise. A Renault Zoé starts at €33,700. That’s almost double the base price of a gas-powered Clio!

But the manufacturers have promised us changes. To pay attention to them, the year 2025 will mark a turning point, with the arrival of a new generation of electric cars that should democratize this type of motorization. Obviously, in most cases they are urban cars: Fiat Punto, Renault 5, Volkswagen ID.1… With these vehicles, the electric car will enter a new dimension in terms of sales volume.

Finally, economies of scale

And therefore the production volumes. This aspect is one of the key elements to lower prices. Producing more logically means lower costs. Above all, for the electric car, the time has finally come for economies of scale, with the distribution of technical elements between models and between brands. The very important initial investment is no longer made in small amounts, but in hundreds of thousands, even millions of vehicles.

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

However, for its city cars, the Alliance has made another economic choice: to adapt the Clio’s CMF-B platform to electricity, which makes it possible to have common components for the thermal and electric… and therefore further increase the amounts. Renault has announced that this new CMF-BEV base will cost 33% less than the current Zoé. This CMF-BEV must equip 250,000 vehicles a year, being used by Nissan, Alpine, but also Dacia. For comparison, Renault assembled 70,000 Zoé in 2021.

Melting the price of batteries

The other very important element for making the electric car more affordable is, obviously, the battery. Especially since it is thanks to her that an electric car is still so expensive! At this point, the groups bet 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 its EV Days in 2021, Stellantis said its goal was to “further reduce the cost of vehicle battery modules electrical”. 40% during the 2020-2024 period and more than 20% more for 2030”.

For this, all the constitutive elements of the battery packs are taken into account: the optimization of the entire module, the simplification of its format, the increase in the size of the battery cells and the improvement of their chemistry. Example: in the United States, Ford has just announced the arrival of lithium-iron-phosphate batteries, in addition to nickel-manganese-cobalt. Depending on the brand, these LFP batteries will be 10-15% cheaper than NMC.

Thanks to extensive work on the bases, motors and batteries, several manufacturers have set themselves a symbolic goal for the future “popular” electric vehicle: an entry ticket of €20,000, equivalent to combustion. If you think that €20,000 is still a lot, that is already the price of a gasoline city car with the correct engine and equipment: a Clio balance TCe 90 CV is €19,900.

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Covid and the war in Ukraine call everything into question

A price that may surprise some, who have not noticed the rise in car prices in recent months. And here is the great concern of some brands: the promise of an electric car starting at €20,000 is sometimes a bit outdated. And since the announcement effect, the Covid health crisis has generated an economic crisis and an energy crisis, these being reinforced in 2022 by the war in Ukraine.

Illustration of this trend: the cheapest electric car has become much more expensive in a few months! Launched in the spring of 2021 at a price of €16,990, the Dacia Spring now starts at €19,800. Here it is already at the level of the symbolic threshold of €20,000, which it could cross in a future rise.

This increase is mainly explained by an increase in the price of materials. And the electric ones are doubly penalized, since the increase in raw materials influences elements such as the bodywork, but also the battery. Selon le cabinet AlixPartners, le coût en matières premières pour les véhiculesélectriques increased by 123% between April 2021 and May 2022, due to notamment du cobalt, du nickel et du lithium, alors that the hausse pour le thermal is 91% in two years. Added to this is the rise in transport and energy prices…

The base price in trompe l’oeil?

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

Arnaud Ribault, the head of Citroën at European level, recently declared to our colleagues atCoach “The work we are doing now is to lower the cost of cars to offset the rising cost of raw materials and the rising cost of electrification.” Therefore, we will have to look at all the expense items.

And maybe reduce the technical sheet? Because we must not deceive ourselves. If Renault hopes to have a €20,000 entry-level R5, it will certainly be with a small battery. Thus, if the Losange already promised 400 km of autonomy with the CMF-BEV base, the most economical of the R5 should have between 200 and 250 km of autonomy. A double positioning that we already know with the electric Fiat 500, which exists with two batteries and two autonomies (190 and 320 km). The access R5 would thus replace the electric Twingo, which now starts at €24,050.

Less battery life, faster charging

Being at €20,000 is possible, but with fewer benefits. We imagine that an R5 with the configuration equivalent to the current Zoé, that is, 110 hp and 400 km of autonomy, will be at best priced at €25,000. Or the price of a Zoé… with the voucher. Because the other challenge for brands is to face the gradual cessation of government aid. In France, the bonus should increase to €5,000 in 2023, and surely to €4,000 in 2024.

More generally, with their urban and compact vehicles, to contain prices, manufacturers will contain the size of batteries and demonstrate pedagogy with customers: 400 km of autonomy, that’s enough for daily trips and weekend getaways. . For long trips, there will be fast charging. You will have to learn to take advantage of the breaks to put juice back into it. With another challenge: to develop this network of fast terminals…

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