Right now, except for some very specific models such as the recently arrived Tesla Model 3 Highland or the MG 4, and little else, electric cars are exorbitantly expensive. No one is immune to this reality, but a report assures that in just two years traditional European brands will completely turn the situation around. They point to a turning point in 2025 with the massive introduction of profitably produced 25,000 euro electric cars. Very interesting information that is worth delving into.
This same week we were talking about the fact that electric vehicles will soon plummet in price because the drop in the price of critical raw materials for the manufacture of batteries has led to the price of batteries showing a really strong downward trend. Right now, batteries already cost less than $100 per kWh of energy storage capacity. Well, a report from Transport & Environment, as we mentioned, ensures that 2025 will be the key year for electric cars in Europe. That will be when the traditional brands of the Old Continent will already have the capacity to manufacture 25,000 euro electric cars profitably.
2 years left until €25,000 electric cars start arriving in Europe
The report points out that manufacturers such as Stellantis and Volkswagen, in addition to the Renault Group, BMW, Volvo, and Mercedes-Benz have been increasing their gross margins in a truly significant way in recent years – since the pandemic. And this is what has led to a growth of up to 34% in new car prices. Yes, there have been problems such as inflation or the microchip crisis, but the reality is that brands are selling fewer and more expensive cars, with wider margins than a few years ago.
And not only has this happened, but the average price of new cars in Europe has risen to 27,500 euros due to other factors such as the focus on larger and more profitable vehicles. That’s why SUVs have increased their market share from less than 10% to nearly 50% in the last decade. While there has been a commitment to boost sales of C-segment models, inferior options have been withdrawn. Compact cars have a market share of 61%, and segment B models already account for just 30% of the market share.
Transport & Environment has worked on three possible scenarios based on Syndex analysis, concluding that starting next year 2025, in just two years, European brands will be able to sell 25,000 euro electric cars in segment B with a margin of 4 %. In what way? Betting on batteries with LFP cells and an average capacity of 40 kWh of energy storage capacity to reach up to 300 km of approximate WLTP range. Of course, this is the most favorable scenario of the three models.
The biggest rival that exists right now for traditional European brands is the ‘new’ Chinese companies that, little by little, are flooding our market. And the biggest problem that the European electric car industry has is that Asians have absolute control over the batteries they use. The two main companies globally are CATL and BYD and, indeed, they are Chinese battery suppliers. But this, little by little, is being resolved with the development of new European battery factories. To achieve cheap electric cars, not only are LFP cells going to be a fundamental lever, but also the new sodium batteries. They can also play a leading role.