For a small car, it is attracting quite a bit of attention: Next spring, Citroën's ë-C3 will hit the market in Germany. With a starting price of €23,300, it is expected to be the most affordable electric car from European production. The model is manufactured within the Stellantis brand world in Slovakia. While the Dacia Spring Electric falls into the same price category and is European, its parent company Renault produces it in China.

Below the threshold of €25,000, the selection of electric cars is still quite limited. The German automobil club ADAC criticizes that only three models are offered for less than €30,000 in Germany. Apart from the Dacia Spring, these include the electric versions of the Renault Twingo and the Fiat 500. Volkswagen has announced the ID.2 for release in 2026, with plans to go even further: VW is working on an electric car with a base price below €20,000. Renault also pledges to go below this threshold in three years.

The efforts of volume manufacturers indicate that the electric vehicle market is slowly but surely entering a new phase. In about a decade, especially in Europe, there won't be an alternative: from 2035 onwards, the EU plans to stop new registrations of combustion engine cars. The implications for manufacturers, as described by Jan-Philipp Hasenberg, Partner and Automotive Expert at the consulting firm Roland Berger, are clear: "Portfolio expansion must occur on the path to 2035."

The future offerings also target customers who cannot or do not want to afford cars priced at €30,000 or more. This shift could alleviate one of the significant drawbacks of electromobility: "It makes electromobility more accessible to more people", says Hasenberg. However, the well-known concern of range anxiety, combined with the still insufficient number of charging stations in many regions, remains.

Stefan Bratzel, Director of the Center of Automotive Management (CAM), anticipates an "increased offering of cost-effective and sufficiently competitive electric cars" from 2025 onwards. Besides VW's ID.2 and the Renault Twingo, he mentions the compact model promised by Tesla. Bratzel currently only finds seven small car models and five in the mini-segment – each one less than a year ago – in the statistics of new car registrations in Germany. He perceives this as a loss of significance for this class.

The fact that automakers have primarily offered electric models in the medium and upper classes has two main reasons. "The willingness to pay for electric cars, which are more expensive compared to combustion engine models, is more likely to be found at the upper end of the market," Roland Berger consultant Hasenberg emphasizes. This focus is also a consequence of environmental policies. "European automakers must achieve their CO2 targets with their vehicle fleets," notes Hasenberg. "Therefore, there is a priority for larger electric vehicles, which replace combustion engine cars with higher CO2 emissions."

The industry principle that larger cars generally provide higher contribution margins and margins than smaller models also applies to electric cars. This hinders manufacturers' engagement in the lower segment. "The price points are even more tense here," believes Hasenberg. "Therefore, there are more discussions among manufacturers in this segment about collaborations to offer competitive prices." In any case, traditional manufacturers still earn significantly less with electric vehicles than with combustion engine cars. Aside from development and startup costs, the battery is the particularly expensive component. A replacement battery costs at least around €10,000.

Citroën equips the ë-C3 with a Lithium Iron Phosphate (LFP) battery, which is cheaper than Nickel Manganese Cobalt (NMC) batteries. However, these NMC batteries have a higher energy density, meaning they can store more energy in a lighter package. On the other hand, the extraction of cobalt is socially and ecologically questionable. A cobalt mine in Morocco and its customer BMW just recently made headlines. Tesla also uses cobalt-free LFP batteries in standard models with lower range. The Chinese competitor BYD, now the largest electric car manufacturer in the world, also uses this technology.

The price of electric cars is also a political issue – not just because of government incentives. After all, it concerns climate goals, which are hardly achievable without the contribution of the transportation sector. The desire for affordable models resurfaced at the recent "Auto Summit" at the end of November when the industry met with Chancellor Olaf Scholz in Berlin.

While politics can achieve lower prices with temporary financial assistance, vehicles still costing more than €30,000 or €40,000 largely fit into the budget of buyers who could afford such cars in Germany even without the environmental bonus. Due to the huge gap in the federal budget, the government has stopped the purchase premium just last week. It was previously planned to run until 2025. Politicians can only appeal to manufacturers to offer more affordable small cars. However, they cannot enforce it.

Affordable prices? Thoughts immediately turn to Chinese providers which increasingly enter the European market. "Due to significantly lower production costs, they can offer much more aggressive prices," notes consultant Hasenberg. However, he adds a caveat: "In my view, the thesis that the Chinese would primarily penetrate the small car segment is not accurate. They prefer to go into the middle of the market, where the large volumes are."

Despite the consolidation beginning among Chinese manufacturers, Hasenberg recommends that Europeans remain vigilant: the strongest emerge from selection. Additionally, a distinction must be made between established companies and startups.

Young providers like Nio and Xpeng are grappling with losses and their costs. "Many of the 200 electric car startups in China will go bankrupt," said Carlos Tavares, CEO of Stellantis, in an interview with "Spiegel" recently. The government is not doing anything about it. Therefore, there is now "a huge wave of consolidation."

This aligns with the strategy of Tesla CEO Elon Musk, who aims for market dominance. With generous discounts, he increases sales and achieves additional economies of scale, even if, at least for now, this significantly burdens profitability. Tesla puts pressure on the competition and accelerates consolidation on the supply side.

Tesla has now changed direction and increased prices in China, the world's largest market for electric cars and overall vehicles.. The effects of buyers acting ahead of the next round presumably contributed to a 5% increase in deliveries for the company in November in that country.

In Germany, according to CAM Founder and Director Bratzel, the weighted average price for a new electric car increased by around €4,000 or over 8% to around €52,700 this year. At least the range and charging capabilities also improved.

From the buyers' perspective, it is positive that the local used car market for electric vehicles is slowly gaining momentum. With the increased number of new registrations and the expanded model range, sales of used electric cars are gradually increasing, especially from lease returns. The ADAC has examined online portals and found that , for example, a two-year-old Tesla Model 3 Standard Range Plus was offered for €31,900. In autumn 2022, such a vehicle was still priced at €38,550, and a year earlier, at €39,700.

The price of a two-year-old VW ID.3 Pro S has decreased within a year from €33,100 to €28,850. For buyers with a smaller budget, the chances of purchasing an electric car – at least a used one – are improving.