The price of battery-electric cars in Germany has decreased by around 18% in real terms between 2020 and 2025, according to a study by the ICCT and Fraunhofer ISI. They found that the number of available EV models has more than quadrupled over the same period.
Price trends appear to point in the opposite direction, with the average list price of battery-electric cars increasing nominally from around €37,000 to €53,000 between 2020 and 2025. This is primarily due to a shift in the model mix, with vehicles in the mid-range and upper mid-range segments now accounting for 73% of the battery-electric car market.
Comparable battery-electric cars have become around 18% cheaper in real terms over the past five years, while the inflation-adjusted prices of internal combustion engine vehicles increased by around 2%.
“Our results show that the market for electric cars has evolved significantly in recent years. Today, these vehicles offer, on average, longer ranges and more engine power, while the actual prices of comparable models have fallen. This is a clear indicator of where Europe’s automotive market is headed,” said Peter Mock, Europe Managing Director at the ICCT.
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The study is based on over 100,000 individual data points from an ADAC database, covering six vehicle segments from compact to luxury cars.
Falling battery costs are a key driver of this trend, with battery prices falling nominally by 21 to 24% between 2020 and 2025, from around €165–185 per kilowatt-hour to approximately €130–140 per kilowatt-hour.
Adjusted for inflation, this corresponds to a decline of 35 to 37%. However, manufacturers have only partially passed these savings on through lower list prices, with some of the cost savings being invested in larger batteries and technical improvements or used to offset research and development costs.
Some of the cost savings have been invested in larger batteries and technical improvements or used to offset research and development costs. They see further scope for price reductions.
“The significant drop in battery costs has not yet fully translated into lower list prices. This means that the potential for further price reductions in electric vehicles has not yet been exhausted,” explained Prof. Dr. Patrick Plötz, Head of the Department of Energy Technology and Energy Systems at Fraunhofer ISI and one of the study’s authors.
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The study identifies a gap in the lower-priced market, with just 19 battery-electric models available in the mini and compact segments in 2025, compared to 35 internal combustion engine models. This gap needs to be addressed.
Broader market adoption will depend not only on lower prices for existing models but also on a wider choice of affordable battery-electric vehicles. They must offer a strong price-performance ratio to attract buyers.
Germany’s new electric vehicle subsidy has also been affecting purchase costs since the start of this year, with buyers of battery-electric passenger cars able to receive up to €6,000 in support, depending on income and family size.
Initial data on approved applications suggest that models offering a strong price-performance ratio benefit most from the scheme, and the combination of falling vehicle prices, a significantly broader model range, and government purchase incentives is beginning to take effect.