T&E: ‘EU carmakers are failing to deliver affordable electric cars’

Just 17% of electric cars sold in Europe are compact vehicles in the cheaper B segment, compared to 37% of new combustion engines, a new analysis finds. Carmakers are slowing EV adoption by prioritizing sales of larger, more expensive electric cars, according to Transport & Environment (T&E), which conducted the research.

According to the report, only 40 fully electric models were launched in the compact segments (A and B) between 2018 and 2023, compared to 66 large and luxury models (D and E).

In Europe, 28% of electric sales are in the large car D segment, compared to just 13% of new combustion cars, according to T&E’s analysis of 2023 sales figures from Dataforce.

Wrong focus in Europe

The average price of a battery electric car in Europe has increased by 39% (+€18,000) since 2015, while in China, it has fallen by 53% (source: Jato Dynamics). This is due to European manufacturers’ disproportionate focus on large cars and SUVs, which carry a price premium.

Anna Krajinska, vehicle emissions manager at T&E: “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.”

Of the sub-€25,000 models carmakers have planned, only 42,000 vehicles are likely to be produced for the European market this year, according to T&E’s analysis of production data from GlobalData.

Despite the lack of affordable models, the EU market share of battery electric cars nevertheless still grew by 2.5 percentage points to 14.6% in 2023.

The corporate car segment can help

However, the EU BEV market share could already be at 22% if the corporate car segment, which accounts for most new car sales, were leading on electrification, the T&E analysis also finds.

T&E analyzed a scenario where the corporate fleet market leads on electrification by selling at least 50% more BEVs than in the private market. This has already been achieved in nine countries: Austria, Belgium, Czech Republic, Hungary, Greece, Luxembourg, Poland, Slovakia, and Slovenia. With an electric uptake of 14%, the corporate sector is lagging behind the private market (15%).

Taxation plays an important role in incentivizing the uptake of electric cars. Still, in countries such as Germany, carmakers have opposed the reform of company car taxes that would increase the tax burden on gasoline and diesel cars.

Setting binding electrification targets for corporate fleets will also be key to accelerating electrification in Europe. T&E is calling on the EU to set targets for fleets to be 100% electric by 2030 at the latest. The EU Commission has opened a public consultation on greening company cars.

Anna Krajinska again: “Corporate cars are the perfect candidate for accelerated electrification. Tax cuts heavily subsidize them, 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,” she concludes.

It has already been decided in Belgium that company cars must be electric from 2026 onward. As they represent two-thirds of the total market, the car market’s electrification will increase much faster than in many other European countries.

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