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Electric vehicles

Global automakers' new battle field: small EVs

Hongguang MINI EV, the world’s No. 2 EV, attracts 180,000 customers with starting price of $4,500

By Aug 30, 2021 (Gmt+09:00)

The Hongguang MINI EV (Courtesy of GM)
The Hongguang MINI EV (Courtesy of GM)

Global automakers stop producing smaller cars among internal combustion engine models. The industry is facing difficulties to make profits from those low-cost vehicles on rising commodity and labor costs, while more drivers prefer larger models. Instead, carmakers are developing smaller electric vehicle models to capture the segment in the quickly growing EV market.

Volkswagen’s premium carmaker Audi plans to discontinue the A1 supermini, according to the auto industry. Audi CEO Markus Duesmann said last month expressed concerns that tougher emissions standards will make small vehicles economically unviable to produce, saying “we won’t have a successor to the A1,” according to Automotive News.

Global automakers have been shunning smaller cars gradually since 2018. General Motors Co. stopped selling the Chevrolet Aveo subcompact, while Stellantis’ Opel ceased the Karl city car hatchback and the Adam city car. In South Korea, Hyundai Motor Co. retired the Accent subcompact, while Renault Samsung Motors Corp. discontinued the Clio supermini. Those decisions came as sales of smaller cars in the local market are declining. Kia Corp. sold 21,359 units of the Picanto in the first seven months in 2021, down 13.8% on-year, while GM Korea sold 13,102 units of the Spark, down 22.8%.

On the other hand, carmakers such as Tesla Inc., Volkswagen, Suzuki Motor Corp. and Mitsubishi Motors Corp. are developing smaller EVs to attract drivers that are looking for affordable EVs. Customers already started focusing more on cost-effectiveness than mileage and charging speed, key factors that have been driving EV sales. The Hongguang MINI EV launched by GM’s local Chinese venture, was the world’s No. 2 best-selling EV. The two-door micro EV attracted about 180,000 drivers with a starting price of about $4,500 in the first half.

Volkswagen is scheduled to launch the ID.1 supermini in 2025 and the ID.2 small sport utility vehicle to kick-start its push into small EVs. The group’s Czech unit Skoda Auto is also set to release a low-cost EV to be sold for around €19,000 ($22,436).

Tesla is also working on a small and affordable EVs. The company is developing a small hatchback EV for the mass market which is expected to be retail for about $25,000, Tom Zhu, president of Tesla’s operation in China, said in a recent interview with foreign media.

Japanese makers plan to release small EVs with cheaper prices in the local market, given strong demand for minicars, equivalent of the European Union’s A-segment. Mitsubishi announced it would release an EV to be sold at around 2 million yen ($18,217) by 2030, about 20% cheaper than the current prices. Suzuki aims to develop an EV of around 1 million yen by 2025 and sell it in Japan and India.

Write to Hyung-Kyu Kim at khk@hankyung.com

Jongwoo Cheon edited this article.
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