Price gap between EVs and ICE plummets
The price difference between electric and combustion-powered cars has more than halved in recent years, according to leading data analyst JATO Dynamics.
The vehicle data specialist said the arrival of more affordable models was helping drive uptake of EVs in Europe, but warned that the relatively high costs of Western EVs remained a barrier for buyers and Chinese brands posed a considerable ‘threat’ to legacy European car makers.
According to its latest report – Closing the Gap – across Europe, the average extra cost a of an EV over an ICE vehicle has fallen from 53% in 2018 to 22% in 2024.
In the UK, the EV price premium fell from 51% in 2018 to 18% in 2024.
JATO said that the narrowing gap was due to a combination of falling EV costs and rising ICE prices. In the Eurozone, the average price of an EV has fallen by 15% while ICE costs have risen 7%. In the UK, EV prices have fallen by 11% while ICE costs have jumped 14%.
JATO Dynamics analyst Felipe Munoz said that the shift in prices was due to tougher regulatory and technological requirements and the falling cost of key EV components such as batteries.
He noted: “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.
“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.”
While more European manufacturers are launching lower-cost models such as the Renault 5 and Vauxhall Frontera, which start in the region of €25,000, JATO said there was still a ‘stark’ contrast between the markets in the West and China.
Its figures showed that the average retail price of an EV in the Eurozone was more than twice that in China, where some EVs sell for as little as €3,250.
The difference has shrunk from 118% to 111% in the Eurozone but has grown in the UK, going from 100% to 122% between 2018 and 2024. In the US, the gap decreased from 125% to 109%.
JATO says this proves that China’s car makers are moving faster than Europe and the US to develop cheap EVs and puts them in a ‘commanding’ position to attract more customers not only in their homeland but also in the west.
Munoz concluded: “China is already one of the major players in the automotive space, and this is not something that is going to change any time soon. After all, a Chinese BEV is likely to be more appealing to consumers than a comparable model from a Western automaker, simply due to the enormous price difference.”