This is not only because EVs are getting cheaper but also because ICE vehicles are becoming more expensive.
- The average price of an EV ha fallen by 25% since 2018.
- In the U.S., the price difference between a combustion car and an EV was 50% in 2021 decreasing to 15% in 2023.
- EVs in the U.S. and Europe are still considerably more expensive than in China.
Electric vehicles used to be a lot more expensive than combustion cars. And in most places outside of China, they still aren’t cheap; in the U.S., the average EV went for $55,000 in December 2024, about 12% more than your average gas-powered car. But here’s the thing: the situation is getting better as battery costs fall and newer, less expensive EVs enter the market.
New data from Jato Dynamics, an auto industry data firm, suggests that the average EV price has fallen by 25% since 2018.
According to its latest report, “EV Price Gap: A Divide in the Global Automotive Industry,” EVs are more affordable than ever and the difference compared to ICE vehicles is shrinking quicker than you may think. While the difference was around 50% in the U.S. in 2021, it decreased to 33% in 2022 and 15% in 2023.
The same isn’t true for Europe, though, where the difference was 27% in 2023, and it actually increased to 29% in 2022 before coming down to 22% in 2024.
But even if EVs have become more affordable, they’re still, on average, more expensive in Europe or the U.S. than in China.
The average price for a new EV sold in China in the first half of 2022 was $33,400 (€31,829) compared to $58,600 (€55,821) in the European Union and $67,000 (€63,864) in the United States. That’s 75% and 101% more, respectively, highlighting yet again how much cheaper EVs are in China than anywhere else.
The average EV price gap between China, Europe and the U.S. continued to widen, and H1 2023 EVs were, on average, 115% more expensive in Europe and 118% more expensive in the States. This partly explains why electric cars make up such a big part of total car sales in China—40% of all vehicles sold in China in 2024 were plug-in hybrids or BEVs.
China’s accelerated EV adoption rate is a direct result of having a much wider choice of very affordable models, as well as EVs being considerably cheaper in the country compared to Europe or America. Jato Dynamics’ data shows that almost 80% of all EVs bought in China in H1 2023 cost under $42,000 (€40,000), and a third of these cost under $21,000 (€20,000).
Last year you could buy a brand new Volkswagen ID.4 Pro in China for around 30% less than in America. This is without factoring in the $7,500 federal tax credit, which a significant part of U.S. EVs don’t qualify for in 2025, and it may be eliminated under the Trump administration.
According to Felipe Munoz, Global Analyst at Jato Dynamics, “The narrowing of the BEV-ICE price gap cannot only be attributed to the availability of cheaper BEVs on the market. Although carmakers’ electric offerings are improving in terms of both quality and affordability, ICE cars have risen in price overall.”
Munoz went on to say, “This is a result of factors such as increased regulation, stricter standards, and the introduction of more high-tech features, all of which have combined to hike the final retail price of these vehicles. In the meantime, electric cars have benefitted from lower battery costs, which has caused BEV prices to decline.”
Kelley Blue Book said the average price of a new EV in the U.S. in July 2024 was $56,520 compared to $48,401—that’s a 16.8% difference. Jato found that the difference had fallen from 53% in 2018 to 15% in 2024. In this time span, the price of electric vehicles went down by 11% while ICE prices rose by 14% on average.
