Can small EVs be truly profitable?

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Eco-think-tank says smaller, lighter electric cars can turn a profit

Other senior motoring executives, it should be noted, have rubbished the idea but the EU has just announced an investigation into whether Chinese companies are ‘dumping’ cheap EVs on the European market in order to squeeze out home-grown car makers.

The maths is simple, and somewhat devastating for those of us who prefer our cars compact. Battery tech — and alongside it the technology needed to meet the next round of emissions standards for petrol engines — is expensive stuff, and the cost of developing all of that isn’t wildly different if you’re making a small hatchback or a big SUV.

The key figure in this is the cost of the battery itself — which has long since become the most expensive component of any electric car. By 2025, according to research by BloombergNEF and quoted by T&E, the cost of a battery should have fallen to $100 per kWh. According to T&E’s research, one-quarter of new car buyers already intend to buy an electric car in the next year, according to a YouGov poll for T&E in France, Germany, Italy, Spain, Poland and the UK. But when given the option of a small €25,000 electric car, the share of new car buyers willing to buy a battery electric model increases to 35 per cent. This would equate to an additional one-million EVs being sold in Europe annually, replacing combustion equivalents.

Julia Poliscanova said: “More car buyers will go electric if small affordable EVs are available. But right now carmakers are happy to cream the profits off large SUVs which are too expensive for many low-income households. Lawmakers need to step in with efficiency standards, taxes, reform of subsidies and other measures that tip the balance in favour of small, affordable electric cars and ordinary people.

 

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