Study Says Cost Still A Big EV Deterrent In Europe

JUL 4 2018 BY VANJA KLJAIC 16

While the European Commission aims for sales of fully electric cars to reach a level of 15% by 2025, and 30% by 2030, cost and infrastructure scarcity still a big deciding factor

The European Automobile Manufacturers’ Association (ACEA) have revealed a brand new study, detailing the shortcomings of the EV market across the European Union. According to the study, the affordability of electric cars remains the biggest obstacle for improved adoption rates, while the lacking infrastructure brings on the final nail in the coffin of EV sales across the EU. The analysis compares national data on the uptake of EVs with the country’s GDP per capita, giving us a clear-cut connection of PPP (Purchasing power parity) and the stage of development for a particular country, with total EV adoptions rates.

Certainly, this doesn’t come as a surprise. However, the market share of EVs being close to 0% in countries with a GDP below €18,000 (~US$21,000) and no more than 0.75% in half of all EU member states, does come as a cold shower for many. Luckily, a shift in the thought process for the EU lawmakers seems to be in sight.

The European Parliament’s Committees on industry (ITRE) and transport (TRAN) are set to vote on the European Commission’s proposal for the future car and van CO2 targets on 10 July. While this is a positive step in the right direction, ACEA (European Automobile Manufacturers’ Association) cautions that the targets set by the European Commission must be realistic, and also, take into account the purchasing power of all EU member states and their people.

The European Parliament mustn’t lose sight of the fact that the market is essentially driven by customers. A natural shift to electric vehicles will simply not happen without addressing consumer affordability. —Erik Jonnaert, ACEA Secretary General

While the ability to purchase vehicles in certain areas is the most dominating factor, the availability of the infrastructure is also a big factor in the diminished sales. This goes in line with the findings revealed in the study by ACEA that found some rather compelling numbers: out of roughly 100,000 charging points available across the EU today, a whopping majority of 76% are located in just four countries; Germany, France, the Netherlands and the United Kingdom. On the opposite side of the spectrum, in Romania – which is roughly six times the sizes of The Netherlands – electric car users can rely on just 114 charging points for the entire country. With a population of roughly 19 710 000, this relates to one charger per 172 894 people.

Nissan and Sibeg partner to develop a new electric ecosystem with 110 Nissan LEAFs in Sicily, Italy

In order to improve sales of EV vehicles and help curb the effect of Co2 emissions, the European Commission has proposed a ‘benchmark’ for the sales of fully electric cars; a level of 15% should be reached by 2025, and 30% by 2030. Currently, just 0.7% of total EU car sales in 2017. are accounted towards purely electric vehicles, while electric and plug-in hybrids accounted for just 1.5% of total car sales in the EU. If the current pace of growth would be kept by 2025, the market share of EV and plug-in hybrid vehicles would rise to just 3.9% by 2025 and 5.4% by 2030 – way below the 15% target goal.

We are worried that some policy makers have completely unrealistic expectations regarding the pace of market development. Already with the Commission’s current proposal for a benchmark, we would need to jump from less than 1% of battery electric car sales today to 30% in the space of less than 12 years. And the Parliament is proposing even more aggressive targets, going as far as 50%. —Erik Jonnaert

While their study gives out a clear rich versus poor argument, the truth is a bit convoluted. The data is clear on the split between richer and poorer EU markets – electric car sales between Central-Eastern and Western Europe, that is correct, but most importantly, the market is split alongside an evident North-South divide – Italy, Greece, and Spain – as well. Following this, in order to counteract this highly fragmented market and achieve an EU-wide average benchmark of 30% by 2030 of EVs sold as proposed by the Commission, more than 50% of all new cars sold in Western Europe would have to be fully electric during that timeframe.

The auto industry is eager to move as fast as it can towards zero-emission vehicles. There is no doubt that this is the future. But to get there, customers must be convinced that this is the best choice for them; both in terms of affordability as well as convenience. A natural shift in the market will not happen without addressing these barriers. —ACEA report

Allego: Europe’s first public ultra-fast charging station (4x 175 kW) now operational in Germany

Certainly, in the last few months, we have seen numerous initiatives by local and federal governments across the EU making efforts to push more EV sales. However, without a clear plan and strategy, resulting in a clear-cut path towards electrification, the target goal of 30% by the European Commission will be a goal too far away.

Source: Green Car Congress

Categories: Charging, General

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16 Comments on "Study Says Cost Still A Big EV Deterrent In Europe"

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Another Euro point of view
True, the only way to justify the economy of buying an EV where I live is to buy a second hand Leaf but that would oblige me to have a second car so, well no, it still does not make sense except as per an environment point of view (and that aspect has to be considered on a total footprint base so that it can happen that a ICE driver can have a smaller environment footprint than a BEV driver depending on his lifestyle where/how he lives). Another issue is that modern engines tends to last for ever neither modern cars do rust so that best economy is often achieved by keeping current ICE car lasting as long as possible. The positive side of this is that by the time my ICE needs replacement I can hope to find on the market normally priced EVs with decent range (250 miles being a strict minimum when often used driving long distances as I do). Actually even at 250 miles it will be a big practicality handicap when compared to my current 650 miles range. Now if I would do much more city driving it would be a very different situation.

It doesn’t help that many EVs are seriously overpriced in the EU (without VAT base Nissan Leaf costs around $33K, base Toyota Prius Prime is $36K etc.) – even when VAT and exchange rate are accounted for.

In most EU countries there are also minimal incentives for EV owners.

The petrol Hyundai Kona Start at about £17K but the EVs start at £24K & £29K all including Tax and insensitives.

In the time it takes to save 12 grand on an expensive to insure and repair EV it will be time to change car again.

I agree. Why do the automakers charge so much? Aparrantly it’s very hard for them to mass produce these things.

I think we need the planned battery factories online before we see massive price reductions.

ACEA should look in the mirror and ask themselves why the manufacturers aren’t producing more electric vehicles.
At this moment all the compelling fully electric offerings have waiting lists. The price is apparantly not an issue for these buyers.

Not such a convincing argument for lower targets at the moment. Apparantly whe need manufacturer targets like China to make them do the right thing.

EVs are only bought if there are incentives. EVs left to their own make no financial sense. For now they can only compete in the light commercial vehicle sector.

Another Euro point of view
EVs will eventually prevail but it will take a much longer time than some might think. There was an article not long ago about market shares of EVs in France and author noted that after a decrease of diesel and an increase of EVs market share for many months we now witness for the last 3 months that market share of each of diesel and electric cars do stabilize (1.2% for electric and 40% for diesel). Now with a EUR 34k Nissan Leaf with the fast charging issues we know it is no wonder Electric car market share gets a bit stuck. Furthermore it wont be a mid 2019 Tesla M3 likely priced around EUR 50k (when 21% VAT is included) that will change much this situation in a market where people reluctantly pay EUR 20k-25k for a new car. I do have actually great hopes in the battery factories that currently break ground in Poland, Hungary and Germany (LG, Samsung & CATL I believe) which will hopefully bring the EV battery cost down a bit when running at max output sometimes in late 2019 or 2020. I hope however that those batteries won’t all go in premium SUV as… Read more »

“EVs will eventually prevail but it will take a much longer time than some might think”

…..but much shorter than this report is reporting. Look at their own numbers. They say it has gone from .6 to 1.5 in three years. Or 2.5x that actually means over 60% by 2030 not 5%. Do the math yourself.

Their main point is That EVs are not selling in large quantities because they are too expensive. We are all positive that is due to the currently high price of batteries but battery prices have been dropping by an average of about 20% per year. By ~2021-2022 their main point is no longer valid and by 2024-2025 initial cost could very well be to EV’s advantage.

In most markets, growth is a bit jaggery; but almost all have a clear upward trend over a longer period of time. Average across all European countries shows a fairly steady exponential growth.

The reason most companies are targeting premium vehicles now, is because Tesla has shown that this is the way to go: it’s much easier to achieve cost competitiveness in premium segments; while more affordable EV programs struggle to make a profit and/or offer competitive pricing. Only as economies of scale achieved through successful premium offerings drive down costs, more affordable EVs become viable.

Note that batteries are production-constrained only because most car makers didn’t foresee the rapid growth in demand, and thus didn’t order enough batteries in time. There is no fundamental problem with scaling battery production volumes.

For maximum effect on the environment, we need successful EV programs — and that unfortunately means focusing on premium segments first, to enable more mainstream programs later.

All of Teslas models will also be subject to the new taxation class in the UK. £40,000 rule – if your car cost over £40,000, you have to pay an extra £310/$410, per year for five years, on top of the standard rate.
Only zero-emission cars (like electric vehicles) are exempt from car tax – but are still subject to the £40,000 rule.

EVs do tend to come with a hefty premium. Except Tesla, but that’s because it only sells luxury class vehicles with the (lower) luxury price range high enough to cover where EV production cost currently is. That’s why Tesla is selling big numbers while competitors trying to sell non premium EVs are struggling. But the luxury class is only a small segment of the market so the challenge is to get those production cost lower and educate people better about the relatively low cost of ownership of EVs.

It’s time OEMs came together to build one car. They did it with Mitsubishi, Peugeot and Citroën to build a rebadged i-MiEV.

“It’s time OEMs came together to build one car.”

Agree on battery form factors and specs for interconnects and let them compete on the actual end product.

That’s what the German makers did years ago… The form factors of large prismatic cells are all standardised by VDA.

What this doesn’t mention is that EV sales figures are actually influenced by incentives more than anything else. It just so happens that most of the “poorer” European countries are dragging their feet more on introducing these. (There are some exceptions — and it shows in the sales.)

That’s not really an economic problem. With a bonus-malus system like in Sweden, incentives can be provided in a budget-neutral fashion. The real issue is a prevalent notion that environmentalism is a luxury, which only rich countries can afford…

ACEA is run by the most fossil loving parts of the car industry. Always assume that anything coming from them has a fossil agenda.

What they don’t tell you is how fast the segment is growing, of how little importance the eastern European countries are to the goals or how fast the cost is dropping (for vehicles that already have a lower TCO than the fossil ones). But that doesn’t fit their agenda of lowering and watering out the environmental goals and keeping the car manufacturers out of having to take any kind of responsibility.

What they really need to do is start working…