EV Affordability: Remarkable Geographical Differences

Apart from concerns about charging infrastructure and battery range, the higher price of electric vehicles has been a major obstacle for buyers all over the world.

European and American auto makers have already discovered that the market is finite for expensive EVs, and that most people want reliable, reasonably priced cars. Until EV prices reach parity with traditional internal combustion engine cars, the EV market remains stuck in the slow lane.

Newly released data from the International Energy Agency (IEA) shows that this is already happening in China, where there are now almost as many affordable electric car models as there are cheap traditional gasoline cars on offer. No wonder sales in China outstrip everywhere else.

The analysis shows that in 2024, almost half of internal combustion engine car models in China cost under $25,000. For electric cars, this was the case for 39 percent of models. High-end models were actually more common among traditional cars in China, with one in five priced at more than $50,000, compared to 15 percent of EV models. In the mid-ranges, electric cars still ran a little bit more pricey in the country.

In Europe and the United States, electric car models on offer in 2024 were on average still much more expensive than combustion cars. Only 3 percent of models in Europe and none in the U.S. were priced below $25,000 last year. Only 6 percent and 3 percent, respectively, cost up to $30,000 in the two markets. Wildly different to the reality in China.

The IEA reports also shows that production by Chinese car makers has started up in Europe, making up around 8 percent of European Union EV production last year. The picture in the U.S. is drastically different, as no Chinese companies have set up shop there. It's one of the reasons why Blank Slate - a new no-frills 'Made in America' electric pickup, with deliveries scheduled to start in late 2026, for under $20,000 - is racking up so many advance orders.

The IEA’s outlook on EV affordability is mostly positive, with the report highlighting the advantages of “falling battery prices, intensifying market competition and carmakers reaching economies of scale”. The authors note that while Chinese car makers were able to pass the factor of falling battery prices on to consumers, American and European producers did so to a lesser degree or failed to do so completely.

The intense competition in the Chinese small car market was responsible for advantageous consumer price outcomes, according to the report, with a whopping 95 percent of Chinese small car sales already electric in 2024. But even in the SUV segment, which is the most popular car category in China, EV models reached price parity with combustion cars last year, again showcasing the radically different reality for Chinese EV buyers.

Forbes