They won’t disappear, however.
The subcompact cars, also known as supermini or B-segment cars in Europe, are becoming a dying breed. These are still the most popular types of new cars in many countries on the Old continent, but small crossovers are becoming the norm for urban driving in many areas. The B-segment, which saw 2.25 million combined sales in 2020, is still something European manufacturers are interested in.
The continent plans to implement stricter emissions standards, further complicating the already complex world of small cars. Euro 7 regulations, which are expected to be in effect at the end 2025, pose a problem for combustion-powered B segment models. This could lead to them becoming more costly. They could be even more expensive.
Luca de Meo is the Renault Group’s boss. They had a conversation with Autocar about many topics, including the new electric-focused strategy of the automaker and the current situation in the supermini market. These cars are very close to becoming unprofitable, and it isn’t looking good. However, things can improve.
According to him, there is an entry price for cleaning up any combustion engine. You need a particulate filter that contains platinum, rhodium and other costly stuff. It can be fitted to a EUR15,000 Clio, or a EUR120,000 Mercedes S-Class. The S-Class filter costs a little more, but is much less in percentage terms. It’s also cheaper and can be paid by customers who have the budget. However, small car companies are finding it increasingly difficult to survive.
De Meo stated Autocar that superminis powered by combustion engines would see a double-digit increase in cost once the Euro 7 standard is implemented. What is the solution? Renault’s CEO believes that electric power is the solution.
According to our experience, the cost of batteries has been falling by about 10% per year. Small electric cars require smaller batteries so they are even more affordable in percentage terms than family-sized ones. The equivalent EV is less expensive as the prices of small combustion cars rise. He explained that the moment has come when the cost curves of the combustion small car and the equivalent EV will cross. At which point, the electric car will be more affordable in Europe.