EVs are too expensive because manufacturers are obsessed with SUVs

New research by Transport & Environment has uncovered a huge disparity between the number of smaller, affordable battery electric vehicles coming to market from European car manufacturers and the number of high-priced  SUVs.

They found that since 2015, the average price of an EV in Europe has increased by 39% whereas in China,where the focus is very much on  smaller, cheaper cars, it has fallen by 59%. This, according to T&E, is due to a disproportionate focus on large cars and SUVs, which carry a price premium.

In China there are 75 EV models available for less than €20,000, whereas in Europe, there is one.

Nor is this is situation that is likely to improve soon. Throughout 2024, only 42,000 cars will come to the European market with a price tag below €25.000

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

It is also striking that manufacturers are much more likely to manufacture compact vehicles with a combustion engine than an electric motor. Only 17% of electric cars sold in Europe fall into the compact category, compared to 37% of ICE vehicles.

While manufacturers are clearly throttling the adoption of EVs by focussing on the more expensive end of the market, T&E also think that fleet operators have a vital roll to play.

Across Europe, corporate car buyers are lagging behind private buyers in EV adoption because of what T&E describe as’ poor national company car taxation policies in many Member States and lack of EU policies that would drive corporate fleet electrification.’

Anna Krajinska said: ‘Corporate cars are the perfect candidate for accelerated electrification. They are heavily subsidised through tax cuts, and companies have the financial muscle to invest in EVs. That’s why the EU must come forward with a law that covers a large portion of the company car market, by regulating leasing giants and companies with big car fleets.’

In the nine EU countries which do have company car taxation policies there is 50% more EVs are going into company fleets  than to private buyers.

T&E call on the EU to:

• Maintain the 2035 100% zero emission sales target and do not reopen the car CO2 standards in 2026.
• Propose an EU regulation to electrify all new sales of corporate fleet cars by 2030 at the very latest and set earlier targets for big fleets.
• Secure small, affordable EVs for the EU market by supporting social leasing via the EU’s Social Climate Fund and introduce a new EV environmental standard.
• Use EU funds and broader industrial policy tools to support the automotive transition on the condition of providing additional and affordable BEV supply above what is required by the CO2 standards.
• Integrate “Made in EU” and environmental requirements into EV subsidy and other public procurement schemes.