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a profitable reality from 2025

The automotive market is on the cusp of a revolution. According to a recent study, compact electric cars will become profitable for manufacturers as early as 2025, paving the way for a massive democratization of green mobility. This prospect could appeal to up to 37% of drivers, marking a decisive turning point in the adoption of electric vehicles.

The meteoric rise of the electricity market

The electric vehicle sector is experiencing exponential growth in France. The figures speak for themselves: in August 2023, registrations of 100% electric cars jumped by 116.8%, totaling 4,121 units. Over the whole year, 38,091 electric vehicles have already found buyers, a staggering increase of 79% compared to the same period in 2022.

This trend reflects a profound change in consumer mentalities. Increasingly sensitive to environmental issues and attracted by the long-term economic benefits, many French people are seriously considering purchasing an electric vehicle in the near future.

Segment B: the future Eldorado of electric vehicles

The study conducted by Transport & Environment (T&E), based on an analysis by the consulting firm Syndex, highlights a particularly promising segment: that of electric city cars, also known as segment B. These vehicles, with an average price of around 25,000 euros, should offer manufacturers a profitability of 4% from 2025.

This prospect is doubly interesting. On the one hand, it allows European manufacturers to compete with Chinese competition, which is increasingly present on the market. On the other hand, it responds to a growing consumer demand for more affordable electric vehicles.

According to BloombergNEF's forecast, 2025 could mark a turning point. In a favorable market scenario, the cost of batteries would drop to $100 per kWh. Equipped with a 40 kWh LFP battery, these electric city cars would offer a range of between 250 and 300 kilometers, an ideal compromise between practicality and cost.

Considerable sales potential

The impact of these affordable electric cars on the market could be considerable. A survey conducted by YouGov for T&E reveals that 25% of potential buyers in France are already considering purchasing an electric vehicle next year. But this figure would rise to 37% if models costing โ‚ฌ25,000 were available.

In concrete terms, this would represent an increase of 103,000 additional sales per year. A leap that could significantly accelerate the energy transition in the automotive sector.

Manufacturers on the offensive

Faced with this potential, several manufacturers have already announced the launch of compact electric models in this price range. These include the future Volkswagen ID.2, the electric Renault 5, and the Cupra Raval. These vehicles embody the desire of European manufacturers to democratize electric mobility and counter the offensive of Chinese brands.

However, it is important to note that not all manufacturers are following this strategy. Some have chosen to withdraw from the B segment, preferring to focus on SUVs, which offer higher profit margins. This trend is all the more marked since SUVs currently represent 53% of new car sales in Europe.

The challenges to be met

To make this vision of an affordable electric market a reality, several challenges remain. T&E stresses the need for concerted action by European legislators to create an enabling environment for the production and marketing of these compact electric vehicles.

Among the avenues discussed, we find:

โ€“ Establishing efficiency standards for electric vehicles at the European Union level.โ€“ Establishing an incentive tax system, with national taxes and subsidies penalising heavy vehicles.โ€“ Introducing higher parking rates for SUVs in urban areas.

These measures aim to guide the choices of manufacturers and consumers towards more environmentally friendly vehicles, better suited to low incomes, and contributing to strengthening the competitiveness of the European automobile industry.

A promising future

The imminent arrival of affordable and cost-effective electric cars marks a major turning point in the history of the automobile. It paves the way for a massive democratization of electric mobility, thus responding to environmental issues while adapting to the economic realities of consumers.

While many challenges remain, the commitment of manufacturers and the evolution of technologies suggest a future where the electric car will no longer be the preserve of an elite, but an option accessible to all. This transformation of the automotive landscape promises not only to revolutionize our modes of transport, but also to contribute significantly to the fight against climate change.

The countdown has begun. By 2025, the face of our streets could well be radically different, with an increased presence of these silent and clean electric city cars. An exciting prospect for all those who dream of greener and more accessible mobility.