analysis
Driving fun with zero emissions: More people would like to switch to electric cars. But affordable models are in short supply unless you accept compromises. When will that change?
At the beginning of the year, Robert Habeck presented an immediate climate plan with the “Opening Balance of Climate Protection” program. The Federal Minister for Economic Affairs and Climate Change spoke of a “turbocharger for the energy transition” and announced that he wanted to make the climate protection requirements “socially acceptable” and “take people along with him”. E-mobility is of great importance here.
But now, months after the opening balance sheet and a serious budget crisis, many car-dependent people who would like to drive in a more climate-friendly way still feel left stranded on the side of the road. Because e-mobility goes straight past low and even many middle income groups. Electric vehicles are often unaffordable for them. The same size, same performance, same appearance with an electric motor usually costs at least 50 percent more than a comparable combustion engine.
“Manufacturers want to become cheaper”
There are just three electric cars in German car dealerships that, according to price lists, cost less than 30,000 euros. If the price limit is raised by government funding and negotiating skills are taken into account, there are at least ten. Not a huge selection for a small budget. And anyone who chooses one of these models pays more: with little comfort and space, and in the worst case, integrity. Because they are primarily “small cars” that offer neither space for modern assistance systems, let alone a family and their luggage.
Small cars, small selection: it’s likely to stay that way in the coming year. “But more are coming, to put it positively,” says Stefan Bratzel, founder and director of the Center of Automotive Management (CAM) research institute. He expects a handful of models from Europe and America as well as some Chinese manufacturers that will be available at better prices.
Bratzel was at the so-called “car summit” in the Chancellery at the end of November and reports: “The statements from some German car manufacturers made it clear that they want to become cheaper, but they won’t get it done in the next few years.” They are now in the process of systematically reducing manufacturing costs in the value chain from the battery cell to the construction of the vehicles. “Their hope is to get prices down in the next two years.” Compared to Tesla and Chinese providers, the German car industry started electromobility too late and was not focused enough.
Government goal a long way off
The Association of International Motor Vehicle Manufacturers (VDIK) can therefore believe that it has an advantage, and President Reinhard Zirpel points to currently around 230 foreign electric car and commercial vehicle models: “We offer vehicles for a wide range of requirements and budgets. Our member companies thus make a significant and “continuing contribution to the spread of climate-friendly drives in Germany.”
This is urgently needed: In order to achieve the climate goals, at least 15 million electric vehicles should be on Germany’s roads by 2030. But the automotive energy transition is currently only being achieved by higher earners: According to CAM, electric car buyers paid an average of 52,700 euros for an e-model, a good 4,000 euros more than the year before. There are just 1.3 million electric cars whirring with German license plates – not even three percent of the total number.
Nevertheless, a lot of burden is placed on the smaller e-vehicles: Most recently, the “environmental bonus” ended when the federal government avoided the budget crisis. Private individuals would still have received support of up to 3,000 euros from the state and the auto industry in 2024. Also this cost reducer: left on the hard shoulder.
Higher interest rates make financing and leasing more expensive
Further ballast for affordable electric cars: the currently higher interest rates. Because this is also accompanied by higher financing and leasing costs, explains Bratzel: “The acquisition costs are therefore higher. This effect is intensified in electric vehicles, which are more expensive than combustion engines. This is a braking factor for the purchase decision.”
And even more payload comes from Brussels: EU legal requirements for safety systems are driving up manufacturing costs. Likewise customs rules: Many batteries come from Asia and are subject to a ten percent tax. Since the EU countries are not yet far enough into their own battery production, industry associations are warning of four billion euros more costs that will be passed on to customers.
SUVs are better suited for heavy loads: in 2023, more than half of the newly registered electric vehicles were SUVs or off-road vehicles, according to a study from Bratzel’s research facility. Meanwhile, Germany’s car population looks almost the opposite: According to statistics from the Federal Motor Transport Authority, SUVs only make up eleven percent, while small, compact and medium-sized cars make up more than half of the registered vehicles.
More Fast charging stations necessary?
Why the auto industry doesn’t seem to target that usual group of customers? Even though an internal combustion engine has hundreds more parts, it is still cheaper. The energy storage alone can cost as much as a small car. “These higher costs can be better hidden in medium-sized SUVs,” explains Bratzel, explaining the manufacturer’s strategy, “and customers are only willing to pay higher prices in the higher segments.”
Is there a lack of supply of affordable electric cars – or is there a lack of demand? Half of German citizens live in rent; Setting up your own charging infrastructure, despite having a legal claim from the landlord: is not a fun undertaking with applications for approval and approval procedures from the owners’ association. Three quarters of people live in cities with climate-friendly local transport and are more likely to use e-cargo bikes or car sharing. According to figures from the Federal Statistical Office, around a third of all households in Germany have neither a garage nor a parking space. And: the smaller the households’ financial flexibility, the lower the proportion with a garage or parking space. Why spend rare money on an electric car that also requires effort?
“We need fast-charging parks,” Bratzel demands again and again. “There must be an opportunity to charge an electric car for 100 or 150 kilometers in ten minutes.” Zirpel also sees it this way: “Only with a dense, reliable network, especially of fast charging stations, can we succeed in convincing customers of the advantages of electromobility and creating enthusiasm for low-emission mobility.”
What the electric car can also be useful for
One could also be enthusiastic about electromobility if an electric car is profitable for its owner, says Bratzel: “The ADAC has already calculated that in some vehicle segments the total costs – including maintenance and upkeep – are already cheaper for electric vehicles. If… If word gets around, that increases demand.”
In addition, there is another potential in the electric car that still needs to be exploited – the storage of excess electricity: “Desirability through customer benefit,” Bratzel calls it. “For example, if the car can be offered as an energy storage device at night when it is stationary and earn a few extra euros, that makes it more attractive.” Bratzel reminds us of the switch from cell phones to smartphones: “The smartphone didn’t make it easier to make calls, but rather it brought new customer benefits and was therefore a success. It has to be the same with electric vehicles.”
Until the “e” in “e-car” also stands for “affordable”, the used car market could help those interested. Bratzel no longer believes the fear of being stranded with a used battery is justified: “A battery report lets you make sure that the quality of the storage is good. Durability is no longer a huge problem.” Finally, when it comes to the purchase costs for electric cars, we should not forget what Robert Habeck reminded us in his “Inaugural Balance of Climate Protection”: The transformation towards more climate protection does not come for free.