While the pricing of EVs in China–the world’s largest market for EVs–has fallen by almost half (47%) since 2011, U.S. and European markets have seen EV prices rise over the same time period, by 38% and 28%, respectively. This is according to a new report by Jato Dynamics on the evolution of the EV markets in China, the U.S. and Europe. The report, “EVs – A pricing challenge” explores EV pricing over the past 10 years, alongside the impact of government incentives on the growth across these markets.
While governments and policymakers have undoubtedly become increasingly influenced by environmental issues and a green agenda in recent years, analysis in the report finds that not enough is being done to produce affordable EVs across several markets.
According to the report, China’s success in producing affordable EVs comes down to a number of factors, including its government’s decision to invest heavily in the domestic market from as early as 2009. Today, consumers in China can buy a brand new EV for as little as €3,700 (approx. $4,321). In contrast, the average retail price for an EV in the U.S. continues to rise faster than any other major global market, the report says, and now stands at €36,200 (approx. $42,279) (up from €26,200 (approx. $30,600) in 2011).
Average retail prices today are the highest in Europe, according to the report. In May 2021, EVs were on average 52% more expensive than ICE cars in the UK, and 54% more expensive in the Netherlands. In Germany, the average retail price of an EV is €39,755 (approx. $46,431) compared to €36,979 (approx. $43,189) for ICE vehicles. Norway is the only exception – the average retail price for EVs is €44,500 (approx. $51,973) compared to €53,000 (approx. $61,901) for ICE cars.
To date, government-led incentives have been a vital factor supporting the automotive industry to offset the price gap between traditional cars and EVs. China’s commitment to the development of affordable EVs has strengthened the market to such an extent that its government is now in the process of phasing out incentives, while OEMs in Europe and the U.S. continue to rely on incentives to boost their sales, the report says.
In the U.S., tax credits have accelerated the growth of the premium EV market, but fail to help lower-income buyers purchase EVs with OEMs yet to develop a truly affordable EV offering, Jato Dynamics says. Prioritizing environmental action in recent years, European governments have developed a range of incentives, including tax exemptions and purchase grants with varying success across the continent.
