(Finance) – Only 17% of electric cars sold in Europe in 2023 are made up of compact B-segment vehicles, which are typically cheaper, while for internal combustion cars the corresponding share is 37%. In Italy the same data show an even greater disproportion: 20% of annual electric sales are in the B segment, while for petrol or diesel cars the corresponding share reaches 47%. This is what emerges from the latest research carried out by Transport & Environment (T&E), the independent European environmental organization, according to which car manufacturers are slowing the adoption of electric vehicles by prioritizing sales of larger and more expensive BEVs. Between 2018 and 2023, according to T&E data, only 40 fully electric models were launched in the compact segments (A and B), compared to 66 large and luxury models (D and E) brought to market in the same period.Price in EU since 2015 +39%, in China -53%
T&E’s analysis (obtained from Dataforce data) shows how, in 2023, 28% of electric car sales in Europe are placed in the D segment, that of large cars (the Italian national figure is 29 %); for endothermic cars the corresponding share is just 13% (only 7% in Italy). The average price of a battery electric car in Europe has increased by 39% from 2015 to today (+18,000 euros) while in China it decreased by 53%. This is mainly because European manufacturers focus disproportionately on large cars and SUVs, which command a premium.
Few small cars and too high prices
Why in Italy are only 20% small cars? Andrea Boraschidirector of the Italian T&E office, told Finance: “The European automotive industry is thus far failing to achieve an important goal: that of bringing a mass-market car to the markets, a zero-emission small car, economical in terms of purchase and management costs. Without this type of car, the decarbonisation of transport slows down significantly. Only 20% of electric cars sold in Italy in 2023 are made up of compact B-segment vehicles, typically cheaper, while for internal combustion cars the corresponding share is 47%. In Europe the same data show a similar, albeit more limited, disproportion. This same disproportion is then reflected in the “high” range, in the more expensive segments. Almost a third of electric car sales in Italy are in the D segment, therefore large cars; for endothermic cars the corresponding share is just 7%. So far, the European automotive sector is proposing a “high-end” interpretation of electric power, which evidently slows down its penetration.
Even with a few economical models the market is growing
From T&E’s analysis, based on production forecasts created by GlobalData, during this year, the models available on the market for less than 25,000 euros will be produced in just 42,000 units for Europe. Despite the scarcity of affordable models, the EU market share of electric cars grew by 2.5 percentage points to 14.6% in 2023.
Why are automakers in Europe prioritizing sales of larger, more expensive BEVs? According to some scholars, explains the director, the electric car follows a typical paradigm of the penetration of new technologies into markets, which always start from a positioning of “luxury goods” to become progressively more “popular”. It is the model adopted by Tesla, for example. It is also true that the main competitor of Musk’s company, BYD, which has become the number one electric car company in the world, was exactly the opposite. However, there is a trend that cannot be limited to electric cars. In recent years, car manufacturers have significantly decreased sales and, at the same time, significantly increased profits. It means that they market models on which they can maximize revenues, and these models are typically larger, higher-end cars, or SUVs. In 2010, SUV sales from Europe’s six largest automakers – BMW, Mercedes, Renault, Stellantis, Volvo Cars and Volkswagen – accounted for just 9% of new cars. In 2022, this percentage has risen to 47%. Sales of this type of vehicle are increasing for all brands and all engines, including electric models. In Italy they now represent over half of the market; and, from our analyses, they cost between 8% and 30% more than similar vehicles in terms of engine and function.
On the supply side why are there few mass-produced cars at too high prices? Here too: the reduction in the supply of small cars on the markets cuts across all engines and all technologies. Small and economical cars, says Andrea Boraschi, are not central to the industrial strategies of the European automotive industry; but in doing so it exposes itself to international competition that could be very strong. Looking specifically at electric, the average price of a battery-powered car in Europe has increased by 39% (+18,000 euros) from 2015 to today, while in China it has decreased by 53%. This is mainly because European manufacturers focus disproportionately on large cars and SUVs, which command a premium. But not only. In the years in which China built its industrial primacy on electric, European car manufacturers spent their time touting “clean diesel”, a lie exposed with dieselgate; then to promote the plug-in hybrid, simply a fake electric vehicle from which numerous countries have already removed all subsidies. Now it seems it’s the turn of climate neutral synthetic fuels. Is anyone really convinced that they will save combustion engines from obsolescence? The European automotive sector has a lot of ground to make up; and it will not do so by chasing false myths as an alternative to electric.
T&E calls for 100% electric company fleets by 2030
Taxation plays an important role in encouraging the uptake of zero-emission cars, but in countries such as Germany carmakers have resisted a company car tax reform that would increase pressure on petrol and diesel models. To accelerate the electrification of road transport in Europe, the setting of binding targets will also be crucial: T&E calls on the EU to set a target for company fleets of 100% new pure electric cars by (and at the latest) 2030. The European Commission has opened a public consultation on the company car transition.