That’s why there will no longer be new cars for 10,000 francs

The Renault 5 comes back as a Stromer.Bild: keystone

New emissions standards are causing the costs of petrol and diesel cars to rise significantly. At the same time, electric cars are becoming cheaper and more popular.

20.07.2022, 17:3620.07.2022, 21:05

A new car with a combustion engine for 10,000 euros? Such prices will no longer be found in the future, said VW brand boss Thomas Schäfer in an interview with the German newspaper “Welt am Sonntag”. He expects prices to rise significantly as a result of the planned EU emission standard Euro 7. Vehicles with combustion engines would be 3,000 to 5,000 euros more expensive due to the more complex emission control.

“With a small car, these additional costs can hardly be absorbed. Initial mobility with combustion engines is therefore becoming significantly more expensive,” said Schäfer. With us, there are hardly any list prices below 13,000 francs. Conversely, the production of electric cars is becoming cheaper all the time, which will make the production of small electric cars profitable in a few years.

Small e-cars under 25,000 francs

From the middle of the decade, they want to bring four electric small car models onto the market, said Schäfer. In addition to the VW ID.2, there will be another model from VW and one electric small car each from Skoda and Seat/Cupra. The small car ID.2 is planned to be offered “for less than 25,000 euros”. The ranges will be at least 350 to 400 kilometers. “That’s the psychological selling point at the moment,” says Schäfer.

The electric small car VW e-Up is currently available from 27,800 francs.

The electric small car VW e-Up is currently available from 27,800 francs.picture: vw

In order to be able to continue to offer an electric alternative in the small car segment below the electric VW ID.3 (corresponds to the VW Golf), the previous mini-electric VW e-Up should continue to be built until 2025.

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Well-known combustion model before the end

Schäfer also left open whether there will be another generation with a combustion engine for the long-standing bestseller VW Golf. That will be decided in the next 12 months. Because the demand for electric cars is developing rapidly and VW has an electric replacement for the Golf with the ID.3, another Golf generation seems unlikely.

For car manufacturers, the production costs of e-cars are currently higher than those of petrol and diesel cars. But that will change rapidly in the coming years. The decisive factor for the fate of the Golf will therefore be how quickly the Golf loses its price advantage over the ID.3. The fact that the ID.3 will also roll off the assembly line at the main plant in Wolfsburg from 2023 is a clear signal as to which model the future belongs to.

VW ID.3: The Golf for the electric age

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VW ID.3: The Golf for the electric age

source: vw

Why e-cars are becoming cheaper

Electric cars are expected to reach the prices of comparable combustion engines between 2025 and 2027. A study by Bloomberg New Energy Finance (BNEF) predicts that luxury and mid-range cars could be as cheap as petrol engines in 2026, and this will be the case for small cars from 2027.

E-cars are becoming cheaper, petrol-driven cars a little more expensive.  From 2027, small electric cars could reach the price level of comparable combustion engines.

E-cars are becoming cheaper, petrol-driven cars a little more expensive. From 2027, small electric cars could reach the price level of comparable combustion engines.grafik: transportenvironment

There are already small e-cars from around 21,000 francs, such as the Dacia Spring. However, due to their short range, these are primarily designed as city or second cars.

As of today, powerful batteries for small cars are still too expensive and can therefore only be found in luxury and mid-range cars. In a few years, however, the costs are likely to drop to a level that will allow car manufacturers to sell small cars with a decent range from CHF 25,000 profitably.

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In particular, falling battery prices and cost savings with larger production volumes will in future make e-cars competitive even at the purchase price. When looking at the total costs over the entire life cycle, they are often already today.

Production facilities optimized for e-cars – so far e-cars have often been built in the same plants as combustion engines – and models designed as e-cars from the ground up, which are easier to assemble than more complex combustion vehicles, push costs further. Conversely, combustion engines lose their cost advantages with falling market shares.

New laws could make the price advantage of combustion engines melt away even faster: In Germany, for example, Economics Minister Robert Habeck (Greens) wants to accelerate the transition from combustion engines to electric cars. He is therefore considering a new climate tax on new car registrations, which should make petrol and diesel engines even more expensive.

Cheap e-cars from VW, Renault – and Tesla?

VW and its sister brands Skoda and Seat have been offering small electric cars like the VW e-Up for a few years. Despite their short range, they are popular because of their relatively low price, but they hardly make a profit. The manufacturers therefore prefer to use their scarce production capacities for larger and more expensive electric cars that can be sold at a higher profit. This is all the more true in times of chip shortages and global logistics and delivery problems.

The market leader Tesla is no exception in this regard. Elon Musk has repeatedly promised a $25,000 entry-level Tesla since 2018, but apart from rumors there is nothing concrete.

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Renault brings affordable electric compact cars

Renault is much more specific. The electric car pioneer already gave a preview of the upcoming R5 small electric car in 2021.

Prototype of the R5: The cult Renault becomes electric.

Prototype of the R5: The cult Renault becomes electric.image: renault

Renault is working on the successor to the electric small car Zoe, which has been popular for years. The Renault 5 is expected to complement or replace the Zoe from 2024.

The R5, which was phased out in the 1990s, is to be resurrected as one of ten electric car models planned by 2025. The electric new edition of the R5 should cost between 20,000 and 30,000 francs.

In conclusion, it can be said that prices of around CHF 10,000 do not seem realistic in the future, either for combustion engines or for e-cars. We are already experiencing a foretaste. Small cars and inexpensive basic models are hard to come by as a result of the worldwide supply problems.


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