I have good news and bad news for Europeans eager to join the electric car revolution, but who can’t afford the huge prices.
The good news: Europeans aren’t likely to buy many of these weird, pricey little urban vehicles showcased at the Paris Car Show. The bad news: there’s a gap at the bottom of the European market for electric cars. If not filled by Europeans, Chinese automakers are poised to strike.
(In a recent report, auto industry consultants JATO Dynamics said the average price of a new battery-only electric vehicle in Europe was €55,821 after tax ($55,000) in the first half of 2022).
For electric cars to become truly ubiquitous in Europe the mass market requires a small, utilitarian and safe vehicle with about 75 miles of range, 65 mph top speed, 2+2 seats for the school run, local commuting and shopping, priced at the equivalent of say $10,000 after tax. “Safe” can be defined as conforming to the European NCAP (European New Car Assessment Programme) standards which all new cars and SUVs must meet. Most of these weird urban runabouts have to meet less demanding standards.
In China there is such a small vehicle – the Hongguang MINI EV – made by a joint venture between General Motors of the U.S., China’s SAIC and Wuling. Last year sales in China reached nearly 400,000, priced close to $5,000. There was a plan to sell a European version, re-engineered to meet European Union safety standards with a price close to $10,000, but these are now on hold.
Small urban vehicles at the show included the Aixam e-coupe, Renault Mobilize Duo, City Transformer, Silence SO4, XEV Yoyo, E-Go Mobile and Microlino.
The Duo is derived from the Renault Twizy with a range of about 100 miles and a top speed close to 30 mph. It can be acquired by subscription. The two passengers sit motorcycle-style. The Microlino from Italy was adapted from the 1950’s BMW Isetta bubble car and is priced from €15,000 ($15,100). Its range is said to be up to 140 miles and top speed 55 mph. The passengers sit side by side, with the single door opening outwards in front of them. The electric scooter maker Silence from Spain has developed the SO4 with similar top speed and range. China’s XEV Yoyo is designed to include the capacity to swap the battery. Aixam from France makes small gasoline vehicles and now has an electric one priced from about €17,000. City Transformer is Israeli. E-GO Mobile is from Germany. The Citroen Ami is already on the market, and a common sight in Paris and most French cities.
Most of these vehicles are defined as quadricycles in France and don’t have to meet European Union safety regulations. Microlino, in an exchange on LinkedIn, said its vehicle meets appropriate safety regulations for motorcycles.
I asked Felipe Munoz, global automotive analyst at JATO Dynamics, if these little vehicles will succeed in the European mass market beyond the student fringe?
“No. They don’t offer what a regular car does: versatility. Yes, they are good for commuting small distances in your neighbourhood, but you can’t use them for anything else. They are neither a proper car, safer and versatile, nor a scooter, which is easier to drive and park,” Munoz said.
Munoz said sales are likely to remain a niche, unless there is a change in the safety regulations and they become less of a motorcycle and more of a car.
French consultancy Inovev said France is the major European market for these little urban vehicles. About 60,000 were sold in 2021 and about the same is expected in 2022. This will advance to about 100,000 in 2025 and 150,000 in 2030. Inovev, in an email exchange, said the sales opportunity in this market is for people who want access to cities controlled by zero emission zones (ZEZ).
“These vehicles could be a second car, in addition to an ICE (internal combustion engine) car, or a unique vehicle for people living in these ZEZs,” Inovev said.
“We think (this sector) will remain a limited volume market and the development may not be higher than today’s, even with future ZEZs,” Inovev said.
Inovev said new entrants from China could disrupt the European market. The market for small electric cars there is already between 600,000 to 800,000 a year, depending on how the participants are defined. The Hongguang MINI could be a contender.
JATO Dynamics’ Munoz isn’t so sure.
“Will China come in and trump everything with the EU-ready Hongguang MINI and sweep the board? Well, as easy as it sounds, I don’t think it is the case. These cars are very competitive in China, but Europe is a different market. First, the Chinese brands need to solve their reputation issues in the West, especially after these years of pandemic, strongly associated to China,” Munoz said.
“However, the entry segments can’t afford having big heritage/status requirements from the public. Therefore, the Chinese products could play an important role if their cars are properly positioned as the best alternative in electric mobility,” Munoz said.
EU CO2 regulations have forced conventional manufacturers to move away from small, unprofitable ICE cars. By 2025 the sale of all new ICE cars will be banned. The regulations were designed to allow European manufacturers to make big, profitable electric cars, but there is little incentive to make small electric ones to fill the gap. As things stand, car buyers at the basic level will find themselves excluded.
Carlos Tavares, CEO of Stellantis and its huge collection of automotive brands from the cheapest little Fiats to Jeeps, Citroens and Alfa Romeos, has said if average citizens are priced out of new cars this could lead to social unrest.
“I can’t imagine a democratic society where there is no freedom of mobility because it’s only for wealthy people and all the others will use public transport,” Tavares said in a speech a couple of years ago.
Cynics say this is what some EU politicians are planning. They want to slash the number of cars on European roads, to save the planet, and force the mass market on to public transport. This is likely to weaken the European auto industry while boosting China’s, which has been developing a complete range of electric vehicles.
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