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The Challenge of the $25,000 Small Electric Car: A Pricing Strategy that Raises Concerns

Title: The Challenge of the $25,000 Small Electric Car: A Failure in Disguise

Transport and Environment recently released a study claiming that small electric cars priced at €25,000 will become profitable by 2025. This news has sparked excitement among electric vehicle (EV) enthusiasts, particularly Tesla fans who see it as the key to mass adoption. However, upon closer examination, it becomes clear that this so-called success is, in fact, a failure that some may attempt to conceal.

The Cost Comparison:
When considering the price tag of €25,000 or $25,000 for a small electric car in the B-segment, it becomes apparent that carmakers used to offer similar products at much lower prices. Despite inflation and supply chain challenges, traditional automakers still offer affordable options. In the US, for example, the Nissan Kicks starts at $20,590, and the Chevrolet Trax is slightly cheaper at $20,400. The Hyundai Venue undercuts both at $19,650, while the most affordable vehicle on American soil, the Nissan Versa, is priced at $15,980. These prices represent a significant discount compared to what small electric cars would cost.

European Market Dynamics:
In Europe, where small vehicles are more popular, the price differentials are even more pronounced. A Nissan Juke can be purchased in Germany for €17,170 ($18,430), while a Skoda Fabia starts at €18,300 ($19,643). However, the real standout is the Dacia Sandero, a technically classified C-segment vehicle that can be purchased new in Germany for just €11,300 ($12,129). This pricing strategy has been successful for Dacia, as it offers more space for less money compared to other vehicles in its segment.

Inverting the Logic:
The challenge with the proposed €25,000 small electric cars is that they charge prices comparable to C-segment vehicles for a small B-segment car. In the past, B-segment cars with internal combustion engines (ICE) cost around €5,000 less than the projected price for these small electric cars. The Dacia Sandero, for instance, is more than €10,000 cheaper than the projected price. This inversion of logic, charging premium prices for small electric cars, raises concerns about their market viability.

Market Environment and Competition:
Considering the market dynamics and consumer preferences, €25,000 small electric cars face significant competition from traditional compact vehicles. For example, a Skoda Scala in Germany still costs €23,070, while a Volkswagen T-ROC starts at €27,085. These vehicles belong to the B-segment and offer comparable or better features than the proposed small electric cars. Additionally, a Toyota Yaris Cross priced at €25,340 provides more room and a higher driving position than a regular B-segment car.

The Situation in the US:
In the US, where larger vehicles dominate sales, the challenge becomes even more apparent. Compact vehicles like the Chevrolet Equinox and Toyota Corolla Hybrid start at prices lower than or equal to the hypothetically profitable $25,000 small electric car. For instance, the cheapest Nissan Rogue Sport costs $24,960, while a derivative of the Sentra demands $20,200. These price points make it difficult to justify the pursuit of a small electric car at the $25,000 price range.

While the idea of a €25,000 small electric car may seem promising, a closer look reveals that it is, in fact, a failure in disguise. The pricing strategy of charging premium prices for small electric cars, comparable to those of larger C-segment vehicles, raises concerns about their market viability. Additionally, the existing market dynamics and competition from traditional compact vehicles further challenge the feasibility of the proposed small electric car. As the industry moves towards electric mobility, it is crucial to strike a balance between affordability and profitability to ensure widespread adoption.

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