By Gary S. Vasilash

B-segment cars are not big in the U.S. Of course, these cars, which are under compacts (e.g., Honda Civic, Toyota Corolla, Hyundai Elantra), are physically small, as in things like the Honda Fit, Toyota Yaris and Hyundai Accent, all of which have departed the scene in the U.S.

However, the B-segment has a solid following in Europe probably not because Europeans just like to wedge themselves into smaller vehicles but because of things like high gasoline prices and parking challenges.

The Boston Consulting Group (BCG) recently performed an analysis of the costs of producing B-segment electric vehicles (EVs) for the European market.

This is apparently quite a challenge, as they found:

“the price difference between a B-segment EV and a similar ICE vehicle is greater than the price differential for other EV and ICE vehicle segments. An analysis of recent French price data found that the average retail price premium on a B-segment EV compared to its ICE counterpart is around 75% (€36,800 vs. €20,900). In the C- and D-segments, the premium is 47% and 11%, respectively.”

People who might be inclined to buy a B-segment EV would likely be disinclined once that price delta is seen at a dealership.

BCG finds that material costs are a big driver, with the material costs for an EV being about 65% higher than the materials for an ICE vehicle.

Batteries play a big role in this.

So as the BCG analysts looked at how prices can be managed, they pointed out, of course, that reduction in battery costs through things like using lithium iron phosphate batteries (LFP) instead of nickel-manganese-cobalt are beneficial.

But there needs to be more done, from reducing the number of vehicle variants to sharing parts across models.

And then there is the manufacturing cost input that must be managed.

The BCG analysts note:

“In the manufacturing realm, restructuring assembly lines to focus solely on producing EVs will automatically lower assembly costs. In both greenfield and brownfield EV plants there are 75% fewer engine preparation and 25% fewer mechanical preparation steps per vehicle compared to ICE factories. This, in turn, improves productivity and factory output while decreasing the number of full-time employees.”

Again, this is about B-segment EVs in Europe.

But it makes one wonder about the recent tentative agreements between the UAW, Ford, GM and Stellantis.

In the BCG model, “decreasing the number of full-time employees” is arguably a positive in that it would reduce costs.

In the new model created by the UAW-OEM negotiators, that is something that is not likely to be realized.

Which could prove to be challenging to the OEMs in the U.S., even when producing much larger EVs.

Faced with competitors who can, this could be rather problematic when pricing those new domestic EV models.