T&E Study: European Manufacturers Neglect Electric Small Cars

European car manufacturers cannot meet the demand for small electric cars in the European market. Only 17 percent of all electric cars sold in Europe were affordable small cars, while the share of new combustion cars in the same segment was 37 percent, according to a new analysis by the European environmental umbrella organization Transport & Environment (T&E). According to T&E, automakers are slowing down the spread of electric cars by focusing on the sale of larger, more expensive electric vehicles. European manufacturers introduced only 40 smaller, fully electric models (Segment A and B) between 2018 and 2023, compared to 66 large and luxury models (Segment D and E), the analysis found. In Europe, 28 percent of electric car sales belong to the D-segment (upper mid-range). For combustion engines, this segment only accounts for 13 percent, according to the sales analysis by Dataforce for the first half of 2023.

At the same time, the average price of an electric car in Europe has risen by 39 percent (+18,000 €) since 2015, while prices in China have fallen by 53 percent. This is due to the focus of European manufacturers on disproportionately larger cars and SUVs, which generate higher profits. In Germany, for example, Mercedes-Benz and BMW predominantly rely on SUVs for their core brands.

"Electromobility must not remain a privilege. German manufacturers like VW, Mercedes, and others are currently focusing on luxury models. By doing so, they are massively slowing down the proliferation of a technology that will be the future. In the medium term, they are harming themselves, as competition from China and the USA is increasingly pushing affordable small electric cars onto the European market," notes Friederike Piper, E-Mobility Advisor at T&E Germany.

The analysis of LMCA production data shows: In 2024, European manufacturers will produce only 42,000 vehicles for the European market that cost less than 25,000 euros. And this is despite the fact that small electric cars can also be profitably produced in Europe and there is demand for them. According to calculations by the NGO, an additional 212,000 electric cars could be sold annually in Germany, particularly to lower-income households, if manufacturers expanded their offerings. In the EU, the market share of electric cars could already be 22 percent if the company car market electrified faster, according to the analysis. This market accounts for most new car sales.

The fleet market is lagging behind especially in Germany

In Germany, the company car market is particularly lagging: Last year, 24 percent of private new registrations were fully electric, but only 16 percent in the commercial sector. According to T&E calculations, nearly four million additional electric cars could be on the roads in Germany alone by 2030 and over six million by 2035 through faster electrification of corporate fleets. Reforming the company car tax or depreciation rules for company cars with internal combustion engines would be an important lever for the transition to electromobility.