by Wang Kai

 

A recent report from the International Energy Agency (IEA) highlights the crucial role of smaller and more affordable electric vehicles (EVs) in driving mass-market adoption.

 

“Although electric cars today often have lower total costs of ownership over their lifetimes due to reduced fuel and maintenance expenses, reducing upfront prices is key to boosting uptake,” the report noted. 

 

Affordability is hindering EV adoption in both emerging and developed markets. According to the IEA Global EV Outlook, 55% to 95% of the electric car sales across major emerging and developing economies in 2023 were large models targeting consumers of high-end goods, and far too expensive for mass-market consumers, who often do not own a personal car in the first place. 

 

In Europe, purchase price remains the primary barrier preventing consumers from adopting electric cars, with the median price consumers willing to pay being EUR 20,000, as per a survey from the European Commission.

 

In this context, smaller and much more affordable models launched in 2022 and 2023 have quickly become bestsellers, especially those by Chinese carmakers, IEA noted in its analysis on developing markets.

 

 

Due to the growing accessibility, vehicles under Category A (at A, A0, and A00 levels in specific) represent around 70% of the auto market in China, according to Lang Xuehong, Deputy Secretary-General of the China Auto Dealers Association. In the first half of 2024, nearly 95% of small cars sold in China were electric as electric models are expected to account for one in two total car sales in this country this year.

 

“These smaller cars are also getting smarter as luxurious set-ups are becoming more common in compact (A level) and even smaller cars, such as seats with massage systems and automatic adjustment, electrically heated steering wheels, or in-situ turn-around, meaning consumers can enjoy more diverse functions than before,” Lang told China Economic Net. 

 

“These intelligent gadgets can now be easily found in cars of a bit over USD 10,000,” she said, adding, “In fact, the cost of these high-end configurations is not high. However, the conventional practice is for manufacturers to reserve them for luxury cars in order to enhance their prestige and increase their price.”

 

 

Another new trend in global NEV market is the rise of plug-in hybrids. Favored for its advantages in addressing consumers’ milage anxiety and reliability in the absence of charging stations while providing a more affordable option for those going green, hybrid plug-in electric vehicles (HPEV) are rapidly gaining traction.

 

Statistics from Counterpoint Research show that global PHEV sales surged by 46% y-o-y in the first quarter this year. 

 

Over 70% of them come from Chinese brands. In China’s NEV exports, PHEVs take up 22% in the first half of this year, up from 8% y-o-y, demonstrating a stronger growth than BEVs. In particular, PHEV exports to other Asia countries surged 2.9 times year-on-year; South America, 3.2 times; and North America, 11.6 times.

 

Insight and Info, a think tank, found that PHEVs are particularly popular among the emerging markets, where charging stations are far from sufficient. Owners of traditional cars, which takes up a rather large amount of NEV users also place their trust on PHEVs for secured long milage.

 

Meanwhile, a lower cost gives PHEVs a competitive edge in the global market where electricity hasn’t become more cost-effective than oil in many countries, driving auto dealers to include more PHEV in their sales strategy to expand customer bases with lesser investment in R&D and manufacturing. 

 

"Today, Chinese automakers are producing PHEVs with a milage of 300 kilometers when running solely on electric power, a leap from less than 100 kilometers just several years ago," Lang said.

 

When it comes to the common technological chokepoints hindering EV affordability and advancements, Luigi Gambardella, President of ChinaEU, suggests that progress in mobility depends on collaborative technological cooperation. 

 

Taking China and Europe as an example, AI application and data management could constitute a significant aspect for automotive cooperation. “A collaboration between these two regions could create an intelligent transportation ecosystem that combines the best of both competencies: European technological excellence in vehicle manufacturing and China's ability to integrate AI and data to improve efficiency,” he said during the World Internet Conference held last month. 

 

“The collection and analysis of data on traffic, energy consumption, and user preferences are essential for optimizing transportation services. Chinese companies, with their experience in big data analysis, could collaborate with European partners to develop shared data platforms that help make more informed decisions, reduce environmental impact, and improve consumer experience,” he added.

 

According to Lang, while localized production is becoming more prevalent with the globalization of automotive supply chain, it doesn’t necessarily lead to technology transfer. 

 

“Localized production has dominated the multinational operation in the automotive sector. From Japan’s Toyota, Europe’s Volkswagen, to General Motors and Ford of the US, they have gone for localized operation for long. but just as core technologies of inner combustion, engines, and gearboxes didn’t come directly for China when they entered Chinese market before the NEV era, the essence of technological upgrades lies in self-driven innovation”, Lang remarked.