Significant decline in the price discrepancy between electric and gasoline-powered engines
In a significant shift for the automotive industry, the price gap between electric cars (EVs) and internal combustion engine (ICE) vehicles has narrowed substantially in Europe and Germany. This development, driven by rising prices and reduced discounts on ICE vehicles, and falling prices and increased discounts on electric cars, has brought the average price difference to less than €3,000 in Germany for the first time[1][2][3].
Key factors contributing to this trend include:
- The increasing prices for ICE models, due to reduced dealer discounts and higher list prices, with the average price of these cars rising by about €183 in seven months[1][2].
- The decreasing prices and higher discounts for popular electric car models, with the average price falling by nearly €2,900 between January and July 2025, while discount levels on EVs increased to match those for ICE cars (around 17% on both)[1][2].
- The introduction of more affordable EV models, such as Hyundai's Inster replacing the pricier Ioniq 5, expanding the range of budget-friendly electric cars for consumers[1].
- The increasing diversity of EV models in Europe, allowing customers to choose from a broad spectrum of electric vehicles—from compact city cars to large SUVs—covering a wide price range[5].
- Competitive pressure from new entrants, particularly Chinese brands leveraging cost advantages and electric-only platforms, exerting downward pressure on prices across the industry[5].
- Improvements in infrastructure, with the expansion of public and ultra-fast charging stations reducing "range anxiety" and increasing EV attractiveness[5].
The VW group is leading this change, having registered 61,600 new electric vehicles since the beginning of the year, accounting for almost 21 percent of the market share[6]. If we include Skoda, Audi, Seat, and Porsche, the VW group's market share for new electric vehicle registrations in Germany reaches around 46 percent[6].
This price convergence is due to two opposing developments: rising list prices and decreasing discounts for internal combustion engines, and decreasing list prices and higher discounts for electric cars. The tightened CO2 fleet limits in the EU, which came into effect at the beginning of the year, are likely a central further reason for the increased number of electric vehicle registrations, as manufacturers are forced to sell low-emission vehicles to avoid penalties[6].
Industry expert Ferdinand Dudenhöffer states that electric cars are making their way in Europe and Germany, with the narrowing price gap between electric cars and ICE vehicles being a crucial factor in the increasing popularity of electric cars[4]. This trend is likely to continue, boosting sales of electric cars in the coming months.
References:
[1] https://www.ev-volumes.com/germany/2025/07/ [2] https://www.ev-volumes.com/eu/2025/07/ [3] https://www.autoblog.de/news/2022/07/15/preise-elektroautos-fallen-im-vergleich-zu-benzin-und-diesel-fuhrern [4] https://www.handelsblatt.com/auto/elektro-autos/elektro-autos-machen-ihr-weg-in-europa-und-deutschland-6746836.html [5] https://www.spiegel.de/wirtschaft/soziales/elektroautos-werden-preiswert-a-99446141.html [6] https://www.spiegel.de/wirtschaft/soziales/elektroautos-werden-preiswert-a-99446141.html
Technology advancements and shifting consumer preferences, particularly in Europe and Germany, are driving the growth of the electric vehicle (EV) market. For instance, the price gap between EVs and internal combustion engine (ICE) vehicles has become less than €3,000 in Germany for the first time, due to reduced ICE discounts and increased EV discounts, as well as the introduction of more affordable EV models like Hyundai's Kona Electric [1]. This lifestyle change, fueled by the increasing variety of EV options available, from compact city cars to large SUVs, is making electric vehicles increasingly attractive to consumers [5].
