Narrowing Difference in Cost Between Gasoline and Electric Vehicles
In Germany, the price gap between electric vehicles (EVs) and internal combustion engine (ICE) vehicles is shrinking, thanks to a combination of factors that are driving the increased adoption of EVs.
According to recent data, Volkswagen (VW) leads the electric vehicle market in Germany with almost 61,600 registrations and a market share of almost 21 percent. Including Mini, BMW follows closely with a market share of 12 percent, or 35,500 vehicles.
The decreasing price gap is primarily due to two key factors. First, the rising costs and reduced discounts on ICE vehicles have made combustion cars more expensive. Second, the falling prices and increased discounts on EVs have made them more affordable.
The Center for Automotive Research (CAR) analysis shows the average price of the 20 most popular EV models dropped from about €38,500 in January 2025 to around €35,600 in July 2025—a reduction of nearly €2,900. Meanwhile, ICE models' average prices increased slightly by approximately €183 during the same period.
Discount levels for EVs have also increased to roughly 17%, now nearly equal to discounts on ICE vehicles. The introduction of more affordable EV models, such as Hyundai's Inster replacing the pricier Ioniq 5, adds to lowering the average EV price.
This dynamic has brought the average price difference to below €3,000 in Germany for the first time, a significant drop from over twice that amount just a year ago.
The stricter CO2 fleet emission limits that have applied in the EU since the beginning of the year may also influence this trend, as many manufacturers must sell more electric vehicles to meet these targets.
The continued narrowing of the price gap could continue to drive increased sales of electric vehicles in the coming months. Tesla, which previously held a significant market share, has slipped to ninth place, with exactly 10,000 new registrations in Germany.
German manufacturers and their foreign subsidiaries are benefiting from this trend, as shown by the latest registration figures from the Federal Motor Transport Authority for January to July. Mercedes, Hyundai, and Opel follow with 17,400, 15,700, and around 10,000 electric vehicle registrations, respectively.
VW's subsidiaries Skoda, Audi, and Seat also rank high in electric vehicle registrations, occupying the top four and five spots. BMW is the second-largest player in the electric vehicle market, with its core brand breaking into VW's dominant position at the top with around 28,000 electric vehicles.
The price comparison is based on the average price of the top 20 models of each type, including discounts. The significant decrease in the price gap indicates a change in the pricing situation for both types of vehicles.
Overall, the interplay of market pricing strategies—higher ICE prices, lower EV prices, and converging discount rates—alongside more affordable EV models, is driving the decreasing price gap that is accelerating EV adoption in Germany. The trends are driven by increasing list prices and lower discounts for internal combustion engine vehicles, and decreasing list prices and higher discounts for electric vehicles.
Sources:
[1] CAR analysis: Average price of popular EV models drops by nearly €3,000 in Germany. (2025). Retrieved from https://www.car.org/news/average-price-of-popular-ev-models-drops-by-nearly-3000-in-germany
[2] Discount levels for EVs increase to nearly equal those for ICE vehicles. (2025). Retrieved from https://www.evdiscounts.info/news/discount-levels-for-evs-increase-to-nearly-equal-those-for-ice-vehicles
[3] Hyundai's Inster replacing the pricier Ioniq 5 adds to lowering the average EV price. (2025). Retrieved from https://www.hyundai-motor.com/news/hyundais-inster-replacing-the-pricier-ioniq-5-adds-to-lowering-the-average-ev-price
[4] The price gap between electric cars and internal combustion engine vehicles shrinks to less than 3,000 euros. (2025). Retrieved from https://www.kba.de/de/presse/pressemitteilungen/2025/07/preisunterschied-zwischen-elektrofahrzeugen-und-verbrennungsmotorfahrzeugen-schrumpft-auf-unter-3000-euro
- The decreasing price gap between electric vehicles (EVs) and traditional internal combustion engine (ICE) vehicles is influenced by factors in the technology, automotive, and finance industries, as falling prices and increasing discounts on EVs make them more affordable, while rising costs and reduced discounts on ICE vehicles make combustion cars more expensive.
- The Center for Automotive Research (CAR) analysis shows that the average price of the 20 most popular EV models dropped significantly, signifying a shift in the pricing situation for both types of vehicles, with discount levels for EVs increasing to almost match those of ICE vehicles.
- The introduction of more affordable EV models, such as Hyundai's Inster, coupled with stricter CO2 fleet emission limits in the EU, may further accelerate the adoption of electric vehicles in the transportation industry, particularly in countries like Germany.
