Electric SUVs on the Rise, Small Cars on the Decline
The electric vehicle (EV) market is seeing a shift as the variety of electrically powered SUVs grows, while affordable small car options shrink. According to experts, the range in small car classes will remain inadequate until 2025, and prices for electric vehicles continue to rise.
The average spending for electric car buyers reached 52,693 euros this year, a 4,023 euro increase from the previous year, as reported by the Center of Automotive Management (CAM) in Bergisch Gladbach. While the average range of all electric cars sold in Germany increased to 423 kilometers and the charging speed to 133 kW, 53% of all electric vehicle registrations are SUVs, with compact and subcompact car classes accounting for only 7% and 11% market share, respectively.
The supply of electric SUVs is on the rise, while the selection of small and micro cars decreases. In 2022, 14 models were available in this segment, but that number has decreased to 12, while the selection of SUVs has grown from 31 to 48 in the same period. The experts forecast a significant increase in new registered BEVs, with 600,000 expected in 2024 (up 15%) and about 750,000 units (up 25%) expected in 2025.
Factors Contributing to the Shift
The market trend of fewer small car options and an increasing number of electric SUVs can be attributed to several factors.
- Consumer Preferences: SUVs have become increasingly popular due to their larger body style, off-road capabilities, and the growing preference for higher-seated vehicles. Consumer demand for SUVs has driven automakers to focus on launching a variety of electric models at different price points, contributing to the growing electrification of this vehicle class.
- Manufacturing Focus: Major automakers are prioritizing the development of electric car models, but the focus is heavily leaned toward SUVs and larger vehicles. Automakers aim to meet increasing demand and compete effectively in the market.
- Battery Costs and Technology: While battery costs have been decreasing, the cost of lithium-ion batteries remains a significant factor in the production of electric vehicles. However, this cost reduction has been more pronounced in larger vehicles like SUVs, which often require more advanced battery technology to achieve the desired range and performance.
- Charging Infrastructure and Range: The availability of charging infrastructure is crucial for the adoption of electric vehicles. While investments in public fast-charging stations are increasing, the focus has been more on supporting the growth of SUVs, which often require longer ranges and more frequent charging stops.
Future Prospects
The growth trends in the electric vehicle market are expected to continue, with technological advancements, market competition, and government incentives playing a significant role in the expansion of electric car options, including smaller models.
- Technological Advancements: Continued improvements in battery technology and manufacturing efficiency will drive down production costs in smaller electric vehicles, making them more affordable for consumers.
- Market Competition: As more companies enter the electric vehicle market, competition will increase, putting pressure on existing players to reduce prices and expand the availability of affordable electric car options across various vehicle classes.
- Government Incentives: Ongoing government incentives and regulations aimed at promoting electric vehicle adoption will continue to support the development and affordability of smaller electric car models.
While specific timelines for the increase in affordable small electric cars are challenging to predict, a significant expansion in the market is likely over the next few years as the industry continues to evolve and adapt to changing consumer demands. By 2026 or 2027, we can expect a more diverse range of affordable electric vehicles, including smaller models, as the industry matures and adapts to this shifting landscape.
