Battery electric vehicle prices fell 18% and model choice quadrupled between 2020 and 2025
In Europe’s largest automotive market, battery electric cars became about 18% cheaper in real terms between 2020 and 2025, even as average prices appeared to rise as a result of a changing model mix. Meanwhile, the number of electric models available on the market has more than quadrupled.
That is the finding of a new joint study by the International Council on Clean Transportation (ICCT) and the Fraunhofer Institute for Systems and Innovation Research ISI, covering the German market as a key indicator of broader European trends. The study draws on more than 100,000 individual data points across six vehicle segments, from small to luxury cars.
“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 a clear indicator of where Europe’s automotive market is headed,” said Peter Mock, Europe managing director at the ICCT.
Average prices rise due to a changing vehicle mix, models themselves are becoming more affordable
In Germany, the average list price for electric vehicles rose nominally from around €37,000 to about €53,000 between 2020 and 2025. However, this increase does not reflect higher prices for comparable vehicles, but rather a shift in the model lineup: The share of mid-range and upper-mid-range vehicles in the electric vehicle lineup rose significantly from 2020 to 2025 and now accounts for 73% of all electric models.
When individual models are tracked over time and vehicle characteristics such as weight, engine power, and range—as well as inflation—are taken into account, the prices of comparable electric vehicles fell by around 18% over the same period. Real prices for vehicles with internal combustion engines, on the other hand, rose by around 2% over the same period.
Battery prices have fallen—savings not yet fully passed on
Global battery prices fell by 21%–24% in nominal terms between 2020 and 2025—from around €165–€185 per kilowatt-hour to about €130–€140. Adjusted for inflation, this corresponds to a price reduction of about 35%–37%. So far, the lower battery prices have had only a limited impact on vehicle prices. However, the average electric range increased by about one-third during the study period, suggesting that savings were invested in vehicle improvements or on recouping research and development costs.
“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.
Model diversity is growing; room for improvement in the small car segment
The number of available battery electric models rose from 38 in 2020 to 159 in 2025. The range of internal combustion engine models declined from 275 to 194 over the same period.
“The number of electric models has grown fourfold in just five years. In the medium and upper medium segments, meaning mid-size and larger cars, consumers now have roughly as many electric options as combustion engine vehicles,” explains Kyle Morrison, ICCT researcher and co-author of the study. A disparity persists in the mini and small car segment: in 2025, there were 19 electric models compared to 35 internal combustion engine models.
The findings point to regulatory certainty, such as long-term stable CO2 fleet limits, as a key factor in further consolidating the European EV market, advancing toward cost parity with combustion engine vehicles, and driving investment in the full electrification of all vehicle segments as well as battery manufacturing.