General manufacturers have promised the democratization of the electric car. The new generation of urban cars that will arrive in the middle of this decade will match the prices of its combustion counterparts, which will mean a drastic change in sales volume and the activation of economies of scale, an effect that will be transmitted to other segments so that in 2035 not a single thermal vehicle is sold. The decline in the price of batteries, thanks to new technologies being investigated and old technologies being revived, will support this change.
Each of the people who still buy a combustion car today will surely wonder why they have not already bought an electric car. Apart from the classic reasons based on autonomy, anxiety, slow recharging or few points to do this operation, there is one reason that stands out above the rest: the price. Today, a Renault Zoe costs twice as much as a Renault Clio with similar features (apart from other reasons in favor of electric such as silence, comfort, sustainability and other reasons that remain on the side of subjectivity.
Manufacturers have promised changes. Year 2025 will mark a turning point with the arrival of a new generation of electric cars that will democratize this propulsion technology. Obviously, in most cases they will be small, urban cars such as the Renault 5 or the Volkswagen ID.2. But despite that, this reality will make the electric car reach another dimension in terms of turnover.
Economy of scale is essential
The demand for these small electric cars will increase because they will not be more expensive than combustion cars and therefore will increase production volumes. Producing more means lower costs, it means, above all for the electric car, the time to economies of scale, the distribution of components and elements between different models and brands. The huge initial investment that until now was intended for a very small number of cars will now be spread over hundreds of thousands and even millions of vehicles.
All the automotive groups have dedicated multimillion-dollar investments to the development of modular electrical platforms and architectures dedicated exclusively to electrical technology. MEB from Volkswagen, STLA from Stellantis, e-GMP from Hyundai-Kia. The Renault-Nissan Alliance has developed the CMF-EV platform that the Nissan Ariya and the Mégane E-Tech have inaugurated and that will also be used in 2023 by the new Renault Scenic, the Leaf and the new Alpine, a year later.
In the case of this Alliance, the strategy for smaller cars goes even a little further, to further reduce costs. It will adapt the Clio’s CMF-B platform to electricity, which will allow common components between the thermal and electric versions beyond the propulsion system. This will further reduce costs and increase the volume of production.
Renault has announced that with this new base, the CMF-BEV, The Renault Zoe would cost 33% less than the current one. Used by Renault, Dacia, Nissan and Alpine, 250,000 vehicles will be assembled on it each year instead of the 70,000 Zoe that Renault assembled in 2021.
The price of batteries
The other element that plays a fundamental role in the democratization of the electric car is the price of batteries. This component is responsible for electric cars being so expensive today. The car groups are betting on a sharp drop in prices. The Renault-Nissan Alliance ensures that in 2026 it will be half and in 2028 the reduction will reach 65%. During its “EV Days”, Stellantis assured that its objective was “to reduce the costs of battery modules for electric vehicles by more than 40% in the period 2020-2024 and by more than 20% more by 2030”.
For this to happen, it is necessary to take into account what must be done on each of the elements that make up an electric car battery pack: the elimination of the modules to gain space, the optimization of the space inside the pack, the simplification of its format, the increase in the size of the battery cells and the improvement of its chemistry. For example, Ford has just announced that it will use LFP (lithium iron phosphate) batteries alongside ternary nickel-rich chemistries (NCM, nickel, cobalt, and manganese). Depending on the supplier, LFP batteries can be 10 to 20 percent cheaper than NCM.
Thanks to the extensive work carried out to provide platforms, motors and batteries, several manufacturers have set themselves the symbolic goal for the future “popular electric vehicle” a price of €20,000which matches the price with a well-equipped city car that would be at the top of the range.
Covid-19 and the war in Ukraine complicate things
The rise in the price of cars in general is something that has been happening in recent years. A reality that affects all technologies and that is very evident. This is one of the great concerns of some brands: the promise of an electric car from 20,000 euros it is a bit obsolete with this reality.
Along with the health crisis, the pandemic has created an economic and energy crisis that in 2022 has been reinforced by the war in Ukraine. To illustrate this reality, you just have to look at the price of the cheapest electric car, which has increased its price considerably in recent months. From an initial price without campaigns or discounts or aid plans of 18,615 euros for the most basic version, it now goes to a starting price of 20,205 euros, according to the brand’s online configurator.
The explanation for a rise like this lies mainly in the increase in the price of raw materials. Electric cars are doubly penalized here, as it also affects the battery. According to the consulting firm AlixPartners, the cost of raw materials for electric vehicles increased by 123% between April 2021 and May 2022, mainly due to the effect of cobalt, nickel and lithium, while the increase in thermal it is 91% in subsequent years. Added to this is the rise in transport and energy prices.
Being realistic is also important
The current economic situation and what is expected in the coming years seriously complicates the builders equation. Werner Tietz, vice president of research and development at Cupra, expressed concern about inflation. “If this continues like this, it will be a problem to be able to offer electric cars at 20,000 euros.”
Arnaud Ribault, head of Citroën at European level, recently declared to Autocar magazine that his current job was aimed at “lowering the cost of cars to compensate for the rise in raw materials: therefore, we will have to look at all the items of expenses”.
Perhaps the solution is to be realistic so as not to fool ourselves. The solution must go through reduce the technical sheet. An R5 that costs 20,000 euros in its base version must have a small battery that offers between 200 and 250 kilometers of autonomy to reach 400 kilometers in the higher versions. A double positioning that is already a reality in the electric Fiat 500 that is offered in two battery options and two autonomies (190 and 320 km).
The ultra-fast recharge option
In the coming years, automakers, and thus buyers, are likely to are forced to choose between large battery packs with basic or low-tech cells, or smaller packs with state-of-the-art cells that support high-power charging. This second option will allow the weight of electric vehicles to be controlled and will reduce dependence on scarce raw materials. However, neither of these two paths is cheap.
To contain prices, manufacturers will be forced to contain battery sizes and educate customers about ultra-fast recharging. It’s time to adjust to the new reality. A urban autonomy of 400 kilometers it’s more than enough for city trips and weekend getaways. For these cases, the linked recharge at home is sufficient. When it comes to travel, ultra-fast charging is the answer. It is up to a reliable and well-sized public recharging network to play its trick, allowing downtimes of less than 20 minutes without this operation assuming an adventure, that is, without uncertainties and doubts about its operation.