A major new analysis from the International Council on Clean Transportation and the Fraunhofer Institute for Systems and Innovation Research reveals that electric vehicles have become significantly cheaper and far more varied across Europe’s largest car market between 2020 and 2025.
At first glance, the numbers might look like electric cars are getting more expensive. In Germany, the average list price for a battery electric vehicle climbed from roughly 37,000 euros to around 53,000 euros over the five year period studied. But researchers say that headline figure tells a misleading story.
The real driver behind the higher average price is a shift in what buyers are choosing, not a rise in the cost of any individual model. Mid range and upper mid range electric vehicles now make up 73 percent of all electric models on the market, pulling the overall average upward simply because more people are buying bigger, better equipped cars.
When researchers compared the same models over time and adjusted for factors like weight, power, range, and inflation, the picture flipped entirely. Like for like electric vehicle prices actually fell by about 18 percent between 2020 and 2025. Over the same stretch, comparable combustion engine vehicles became roughly 2 percent more expensive in real terms.
Batteries got much cheaper, but buyers have not felt it all yet
Behind the scenes, the cost of the single most expensive component in any electric car has dropped sharply. Global battery prices fell between 21 and 24 percent in nominal terms during the study period, moving from roughly 165 to 185 euros per kilowatt hour down to about 130 to 140 euros. Once inflation is factored in, that reduction is even more dramatic, reaching somewhere between 35 and 37 percent.
Despite that steep decline, the savings have not fully shown up in showroom prices. Instead, much of that value appears to have gone into improving the cars themselves. Average electric range grew by around a third over the five years, suggesting manufacturers redirected battery savings toward longer range vehicles rather than lower price tags, or used the margin to offset research and development costs.
Patrick Plötz, who leads the Energy Technology and Energy Systems department at Fraunhofer ISI and coauthored the study, pointed out that the full benefit of cheaper batteries has not yet reached consumers, meaning there is still considerable room for electric vehicle prices to fall further in the coming years.
Four times more electric models to choose from
Buyers today have a dramatically wider range of electric vehicles to pick from than they did just five years ago. The number of available battery electric models in the German market jumped from 38 in 2020 to 159 in 2025, more than quadrupling in that time. Meanwhile, the number of combustion engine models on offer actually shrank, falling from 275 to 194.
ICCT researcher Kyle Morrison, who also worked on the study, highlighted that the growth has been especially strong in the mid size and larger segments, where electric buyers now have roughly as many choices as combustion engine buyers.
That said, one gap remains stubbornly wide. In the mini and small car segment, buyers could choose from only 19 electric models compared with 35 combustion engine models in 2025, showing that affordable, compact electric cars still lag behind in variety.
What comes next for the European market
The study’s authors point to one factor as especially important for keeping this momentum going: regulatory certainty. Stable, long term CO2 fleet limits are seen as key to consolidating the electric vehicle market further, pushing prices closer to parity with combustion engine cars, and encouraging continued investment in electrification across every vehicle segment, including battery manufacturing itself.
With battery costs still falling and model availability continuing to expand, the findings suggest that the electric vehicle market in Europe’s largest economy is not just growing, it is maturing, with more room for prices to drop even further in the years ahead.
