The price of electric cars has undergone an important evolution over the last ten years. Where has the price of electric vehicles been lowered the most? This analysis highlights the hegemonic position of China in terms of electric mobility and the work that lies ahead of other major superpowers such as Europe and the United States.
The main automotive markets are immersed in an ambitious transition process towards sustainable mobility. The massification of the electric car it is already a reality in certain parts of the world. However, for this type of zero-emission cars to become the option most demanded by drivers, prices must continue to adjust.
For years there has been speculation about when the long-awaited price equality between electric cars and cars with internal combustion engines will occur. JATO Dynamics has released a very interesting report that allows us to analyze how has the evolution of the prices of electric cars been during the last 10 years. A report that highlights several issues. China, the United States and Europe are the leading markets.
China is the world’s leading market for electric cars
The price of electric vehicles in China, the world’s leading market for this type of vehicle, has been reduced by almost half, 47%, since 2011. On the contrary, the United States and Europe have seen how the prices of electric vehicles have increased during the same period of time by 38% and 28% respectively.
China’s success in producing cheap electric cars is due to a number of factors, including the decision of its authorities to invest heavily in the domestic market since 2009. Right now, Chinese drivers can get their hands on a new electric car for only € 3,700. A figure that contrasts, and a lot, with the € 36,200 in the United States. In Europe, if we take Germany as a reference, we will find that the average price of an electric vehicle was € 39,755.
Despite this huge gap between China and the rest of the worldThe truth is that the tax incentives and aid implemented by the authorities of the European and American states has been decisive to avoid a greater escalation in prices.
China sets the path for the United States and Europe to follow
In the last decade China has established itself as the leader in electric vehicle adoption. In 2010, the Chinese government announced a trial program to offer incentives of up to 60,000 yuan (€ 7,900) for the purchase of new battery electric cars and 50,000 yuan (€ 6,600) for the purchase of plug-in hybrid cars in five major cities. . Shanghai, Shenzhen, Hangzhou, Hefei and Changchu.
These incentives began a decade-long period of developing the world’s largest electric vehicle market. After a decade of growth and market maturity, China planned to phase out such aid by the end of 2020. However, the entry into the scene of the coronavirus pandemic forced a moratorium to be carried out until 2022.
If we move to United StatesAfter 2010, electric vehicles were eligible for aid amounting to $ 7,500 (€ 6,400). In May 2021, the United States Senate Finance Committee advanced legislation that will increase tax credits for electric vehicles to $ 12,500 (€ 10,700). However, these aids are being concentrated in the luxury electric market. Lower income buyers are not receiving this help.
Shifting focus to EuropeIf we take Germany as a reference, one of the most important European car markets and where the most electric car registrations are registered. Currently, the ‘Umweltbonus’ program is in place to encourage the purchase of electric vehicles. Subsidies of up to € 9,000 are offered for fully electric cars as long as their sale price does not exceed € 40,000.
Other members of the European Union have pursued similar strategies. Encourage the purchase of electricity by offering direct aids of greater or lesser amounts depending on various parameters.
The evolution of electric car prices in the last 10 years
The Electric vehicle prices in the United States and Europe continue to rise, while they fall in China. In China, this year 40% of the electric cars sold were urban cars that had an average retail price of € 6,700. And as we have previously pointed out, consumers can access an electric city car from € 3,700.
In Europe the price increases considerably since it takes at least € 15,740 to purchase an electric vehicle. In the United States, this amount increases to a minimum of € 24,800. Something logical if we take into account that in North America, segment A where city cars are framed, is practically non-existent. These price differences are also affected by the demand for electric vehicles and the available supply. In Europe, the market is dominated by SUVs and in the United States by medium saloons. In China, by contrast, electric city cars dominate.
The Evolution of the price of electric vehicles in China is impressive. In 2011, the average retail price was € 41,800, which has fallen to € 22,100 this year. This is a decrease of 47%. In comparison, the average retail prices of registered electric vehicles in Europe fell from a minimum of € 33,292 in 2012 to € 42,568 in 2021, which translates into an increase of 28%. And in the United States, it has gone from € 26,200 in 2011 to € 36,200 in 2021, 38% more.
Electric cars are still too expensive in the United States and Europe
Despite numerous attempts made in many markets, the Electric vehicles continue to have a very high selling price in the United States and Europe. There is an urgent need for the industry to focus on more affordable electric vehicles that can reflect real consumer demand. In the tumultuous year 2020, 44% of global demand for passenger cars was for SUVs, but SUVs only accounted for 25% of combined electric car sales between China, the United States and Europe.
Electric vehicle prices need to fall as technology and infrastructure improve. Otherwise, and if the roadmap established by the European Commission for the year 2035 materializes, a large part of the population will not be able to buy an electric car. It is necessary to find new ways to reduce costs significantly, which may be transferred to the sale price to the public. Otherwise, China will continue to increase its lead in this particular race to transition to all-electric mobility. The Asian Giant has awakened for many years.