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By: Neil King

Purchase price remains a major hurdle for potential buyers of electric vehicles. In fact, BMW has just announced that the i3 will start at €34,950, which is lower than the €40,000 price that industry commentators were expecting. However, the BMW 118i and BMW120d are priced at around €27,000 and €29,000 respectively in 5-door form and so the i3 is between €6000 and €8000 more expensive than a comparable conventionally-powered BMW, which translates into a premium of 20-30%. This is a problem.

Although the i3 has been priced lower than generally expected, the €34,950 tag does not bode very well when considering a recent survey conducted by Euromonitor. One question asked how much respondents are willing to pay for a “green” or environmentally-friendly car, compared to a standard car, and this was the result:

Survey Results in Response to “Please state how much you are willing to pay for a “green” or environmentally-friendly car, compared to a standard car.”
How much are consumers willing to pay for an environmentally friendly car

Source: Euromonitor International

Interestingly, only 12.5% of respondents said they wouldn’t be prepared to pay anything extra for an eco-friendly car, meaning that a healthy 7 out of 8 would pay more. However, no respondents were willing to pay a premium of 25% or more and this suggests that the i3 may be priced a little too high. In fact, a premium of 15% could thus be seen as a reasonable limit for green cars and compared to the €29,000 price tag for a BMW120d, this would suggest a sticker price of €33,350 for the i3. Given this, surely the i3 should be priced at €33,333 – BMW may just have missed a banner marketing opportunity.

As far as international markets are concerned, a consideration in pricing EVs, especially in relation to conventional-powered vehicles has to be local fuel prices, which suggest that consumers would tolerate a higher premium for an electric car in Italy or in the UK than in Russia for example.

Price for 10 Litres of Diesel and Premium Unleaded Petrol in Selected Countries
Price for 10 litres of diesel and premium unleaded petrol in selected countries

Source: Euromonitor International

The i3 is the first electric vehicle from a premium brand and so may yet prove to be very popular among aspirational consumers with green tendencies. The car can hardly be classified as affordable but is certainly moreso than a Fisker Karma or a Tesla Model S. Moreover, with the backing of a trusted brand, not to mention emergency recharge and courtesy cars thrown in, it could be just the car to switch consumers on to electric vehicles at last. Especially if it was just that little bit cheaper, at €33,333.

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