German electric car prices fall in real terms

Electric cars with comparable specifications became substantially more affordable in Germany between 2020 and 2025, even as the typical advertised price rose sharply because manufacturers expanded their ranges towards larger and more expensive vehicles.

Inflation-adjusted list prices for battery electric vehicles fell by about 18 per cent over the five-year period after differences in weight, engine power and driving range were taken into account. Prices for comparable petrol and diesel vehicles increased by around 2 per cent on the same basis.

The findings resolve an apparent contradiction in Germany’s electric vehicle market. The median nominal list price of an available battery-powered model rose by roughly 42 per cent, from about €37,000 in 2020 to €53,000 in 2025. The increase did not mean that the same type of electric car had become more expensive. It reflected a major change in the composition of the vehicles offered for sale.

Carmakers introduced a growing number of electric sport utility vehicles, executive cars and upper-medium models while leaving fewer choices for buyers seeking small, low-cost vehicles. Middle and upper-middle segments accounted for 73 per cent of the available electric models by 2025.

Researchers reached their price estimates by examining more than 100,000 individual records from an ADAC vehicle database. They compared cars with similar technical characteristics rather than simply calculating the average price of every electric and combustion-powered model on the market.

That adjustment was essential because Germany’s electric vehicle selection changed dramatically during the study period. The number of battery electric models available to buyers increased from 38 to 159. Combustion-engine choices declined from 275 to 194 as manufacturers redirected investment towards electrification and began withdrawing older petrol and diesel lines.

The expansion gave consumers far more choice, but it remained uneven. Only 19 battery electric models were available in the mini and small-car categories in 2025, compared with 35 petrol-powered vehicles. The shortage of entry-level options continues to restrict adoption among households that cannot afford premium models.

Technical improvements were also substantial. Average electric driving range increased by about one-third between 2020 and 2025, while vehicle performance and motor power generally improved. Part of the savings generated by cheaper batteries and more efficient production was therefore used to deliver greater range and better specifications rather than fully reducing retail prices.

Inflation-adjusted global battery prices fell by an estimated 35 per cent to 37 per cent during the period. Batteries remain one of the largest cost components in an electric car, but the reduction has passed through to buyers only partially.

Manufacturers have also prioritised profit margins and higher-value models, where production costs can be recovered more easily. Large electric vehicles tend to carry bigger batteries, more equipment and higher prices, lifting market-wide averages despite lower underlying costs.

The distinction between adjusted and headline prices is important for consumers and policymakers. A buyer looking only at the median list price could conclude that electric mobility had become less affordable. A comparison of similar cars shows the opposite trend, with battery-powered models gaining ground against petrol and diesel competitors.

Transaction prices may strengthen that advantage further. The study assessed official list prices because consistent data on prices paid by customers were not available across the full market. Discounts on several important electric models have increased, meaning actual showroom prices may have fallen faster than published figures suggest.

The German market has faced volatility since the government abruptly ended its electric vehicle purchase subsidy in December 2023. Registrations weakened in 2024 before demand began recovering as manufacturers introduced cheaper models, offered larger discounts and responded to tighter European Union carbon dioxide limits.

Across the wider European market, average battery electric vehicle prices declined by about 4 per cent, or €1,800, in 2025. Prices in the small-car segment fell more sharply as models including the Renault 5, Citroën ë-C3 and other lower-cost vehicles entered showrooms.

Greater production volumes, falling component costs and competition from manufacturers based in China are expected to maintain pressure on European carmakers. Volkswagen, Renault, Stellantis and other groups are preparing additional mass-market electric vehicles as they seek to comply with emissions rules and protect market share.

Price parity between electric and comparable combustion-engine cars could be reached across major European vehicle segments by around 2030 if battery costs continue falling and manufacturers pass more savings to customers. Larger electric cars are already close to parity in several categories.