How much electric car prices have fallen since 2018
In just six years, the average price in Europe has fallen by eleven per cent and in the USA by 26 per cent
The main problem with the rapid introduction of electric cars worldwide is their high price. It is no secret that an electric vehicle is generally much more expensive than a vehicle with an internal combustion engine. The development of so-called zero-emission cars is not only expensive, but also complex when you consider the geopolitics of battery components.
Therefore, manufacturers' efforts and the public's attention are focussed on the final price of electric cars (also known as battery electric vehicles, BEVs). This is a key element in the uptake of these vehicles. It is as simple as the basic rule of economics: there will be demand if the price is fair. Unfortunately, distortions caused by government incentives and trade tariffs are hampering efforts to lower prices.
"From 100% to 5%" 2025
Nevertheless, some progress has been made so far. According to the latest study by JATO Dynamics, presented in Rome at "From 100 to 5 per cent", Europe's largest comparative test of electric car efficiency organised by Motor1.com and InsideEVs, the average selling price (excluding incentives and rebates) for an electric car in Europe (Eurozone) fell by 11 per cent (inflation-adjusted prices) between 2018 and 2024. In the USA, the decline was even greater at 26 per cent over the same period.
The good news comes at a time when prices for cars with internal combustion engines (ICE) have risen. In the eurozone, for example, average prices for petrol, diesel and mild hybrid vehicles rose by seven per cent between 2018 and 2024. This means that the price difference between BEVs and ICEs has fallen from 42 per cent in 2018 to 19 per cent last year. Although 19 per cent is still a lot, consumers may be starting to notice the smaller price differences.
Average retail price of BEVs available on the market adjusted for inflation.
However, progress looks pale
It is unclear whether the falling prices of electric cars are the result or the cause of the growing demand for these vehicles. Despite the recent difficulties they have faced and the ever-increasing timeframe for full transition, BEVs are here to stay. They are an essential part of car manufacturers' future plans and governments' targets.
Mass adoption has not yet happened, at least in the West, with the obvious and well-known exception of Norway of course. In China, things are different. Last year, around 51 per cent of all BEVs worldwide were sold there, and the reasons for this are obvious. Economies of scale and the safety of battery component production have enabled Chinese car manufacturers to lower the final price of their increasingly competitive electric cars.
In fact, China has achieved so much in such a short space of time that the positive story of falling prices in the West seems to pale in comparison to what customers there pay for an electric car. Today, you can buy a brand new BEV in China for as little as €3,250 or £2,750.
Average retail price of BEVs (EU, Italy, UK, USA, China) available in 2024
The average selling price of electric cars available on the market is €29,682 or £25,000 at the exchange rate of November 2024 (when the study was conducted). That's about half the price in Europe and the United States. We're not there yet.
There is hope
Both Europe and the US are far behind China when it comes to electric cars. Until they have secured the supply chain to manufacture their own batteries, it will be difficult for them to influence prices.
Average sales price BEV vs. ICE 2024
However, with the introduction of more affordable models coming onto the market in 2025, the price is likely to fall further and at least get closer to what you currently pay for a car with an internal combustion engine. A good start.
More facts and figures:
The author of the article, Felipe Munoz, is an automotive industry specialist at JATO Dynamics.
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