A recent report, sourcing information from Renault’s current CEO Luca de Meo, suggests that the cost of combustion-powered supermini B-segment hatchbacks from Europe such as the Volkswagen Polo and Renault Clio could double in price by 2025 due to the EU’s strict emission regulations.
Speaking to Autocar, De Meo answers the question of whether there is any value left in still producing B-segment hatchbacks. He reveals that small cars with combustion engines are being hit badly by the rising costs of Europe’s stringent clean-air regulations and that we can expect the price of these small cars to double by 2025 when the Euro 7 parameters are implemented.
“There’s an entry price to clean up any combustion engine,” he explains. “You need a particulate filter containing platinum, rhodium and other expensive stuff, whether it goes onto a €15 000 (approximately R261 400) Clio or a €120 000 (approximately R2 million) Mercedes-Benz S-Class. Sure, the S-Class filter is a bit larger, but it’s much cheaper in percentage terms and the customer can afford to pay. But life is getting very hard for companies making small cars.
“Meanwhile, the cost of batteries is falling at about 10 per year a year, according to our experience. And small electric cars need smaller batteries, so they’re even cheaper in percentage terms than family-sized EVs. As combustion small car prices rise, the equivalent EV falls. The moment is approaching when the two cost curves will cross – at which point the electric car will become the more viable in Europe.”
A battle is raging right now between car makers wanting to be the first to reach this crossing point, says de Meo. It will be a huge moment because it will democratise electric cars across Europe. The company that gets there first will be a big winner. Project R5, the poster car for the Renaulution currently being productionised at top speed by Renault’s designers and engineers, is meant to symbolise this moment. “Most of the industry expects the lines to cross in 2025-26,” says de Meo. “But maybe we can be first if we engineer a very smart project. It’s a race against time.”