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Why EVs Could Be Too Expensive For The Masses

Industry News / Comments

Carmakers are genuinely concerned.

Major mainstream automakers continue to invest heavily in electric vehicles, and there's no doubt that EVs will increase their market share in the next few years. By how much remains a mystery, but one of the factors that will determine this is their affordability.

Automotive News Europe reports that the same governments that championed EVs in the first place are inadvertently making them unaffordable for the majority of car buyers. Volkswagen Group CEO Herbert Diess has warned that the European Union's proposed emissions targets for 2030 are too demanding, and this could result in increased EV prices.

Here's his reasoning: Diess confirmed his company will be able to meet with the EU's average fleet carbon dioxide emission by 2030, but doing so would come at a greater R&D expense, an expense that will have to be passed down to customers. "I am not sure how many customers could afford it," Diess was quoted as saying. Wealthier car buyers won't have a problem paying for more expensive EVs, but Diess doesn't want VW's upcoming EV lineup to be unattainable for the masses.

Diess is also concerned prices for its current entry-level vehicles, such as the overseas-only Polo and Up minicar, could also go up by several thousand euros specifically due to efforts to meet those 2030 targets. "I am not sure how many customers could still afford our entry-level models," he said.

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Diess specifically pointed out France's "yellow vest" protests were ignited by a 10-euro cent increase in diesel fuel. An increase on future electric cars could also have a potential impact on factory jobs. Say if half of VW's future sales are EVs. In that scenario, the automaker would then have no choice but to reduce the number of people building internal combustion powertrains.

The bottom line is that Diess is convinced the EU's 2030 emissions target is "too demanding" and should be adjusted before it's too late.