Electric vehicles are becoming more affordable in Europe, even if average sticker prices suggest otherwise. A new study examining Germany—the continent’s largest automotive market—shows that comparable battery-electric vehicles (BEVs) have become significantly cheaper over the past five years while offering better performance, longer driving ranges, and more model choices than ever before.
The research, conducted jointly by the International Council on Clean Transportation (ICCT) and the Fraunhofer Institute for Systems and Innovation Research (ISI), analyzed more than 100,000 vehicle data points across six market segments ranging from compact city cars to luxury models.
EV Prices Are Falling When Compared Like-for-Like
At first glance, electric cars appear to have become more expensive. The average list price of a new EV in Germany increased from approximately €37,000 in 2020 to around €53,000 in 2025.
However, the study found that this increase is largely the result of a changing vehicle mix rather than rising prices for comparable models.
Today’s EV lineup includes a much larger share of mid-size and premium vehicles. In fact, mid-range and upper-mid-range models now account for 73% of all electric cars available on the German market.
After adjusting for inflation and accounting for improvements in vehicle specifications—including battery size, driving range, weight, and motor output—the researchers found that the real price of comparable electric vehicles declined by around 18% between 2020 and 2025.
During the same period, comparable internal combustion engine (ICE) vehicles became approximately 2% more expensive in real terms.
image: ICCT
Lower Battery Costs Continue to Improve EV Value
Battery technology remains one of the biggest drivers behind falling EV costs.
According to the study, global battery prices dropped by approximately 21% to 24% in nominal terms between 2020 and 2025, falling from roughly €165–€185 per kilowatt-hour to €130–€140 per kWh. After adjusting for inflation, the decline reaches approximately 35% to 37%.
While manufacturers have not yet passed all of these savings directly to consumers through lower vehicle prices, the lower battery costs have helped improve overall vehicle capabilities.
Over the five-year period, the average electric driving range increased by roughly one-third, indicating that many manufacturers invested battery savings into larger battery packs, improved technology, and recovering research and development costs.
The researchers suggest that additional price reductions remain possible as battery production becomes more efficient and manufacturing costs continue to fall.
More Electric Models Than Ever Before
Consumer choice has expanded dramatically.
The number of battery-electric models available in Germany increased from just 38 models in 2020 to 159 models in 2025, representing more than a fourfold increase.
Meanwhile, the number of combustion-engine models declined from 275 to 194 over the same period.
For buyers shopping in the popular mid-size and larger vehicle categories, electric vehicles now offer nearly as many choices as traditional gasoline and diesel-powered models.
The only major gap remains in the smallest vehicle segments. In 2025, buyers could choose from just 19 electric mini and small cars, compared with 35 combustion-engine models.
Expanding affordable electric city cars remains one of the biggest opportunities for European automakers as demand for lower-cost EVs continues to grow.
Stable Policies Could Accelerate EV Affordability
The study concludes that predictable long-term regulations, including stable CO₂ fleet emission targets, will play an important role in helping manufacturers continue investing in electric vehicle development and battery production.
As production volumes increase and battery costs continue to decline, the market is expected to move closer to price parity between electric and combustion-powered vehicles across every major vehicle segment.
With a wider selection of models, longer driving ranges, improving technology, and steadily declining real prices, Europe’s electric vehicle market appears to be entering a more mature phase—one that should make EV ownership increasingly accessible for mainstream buyers in the years ahead.
