The average price of electric vehicles in the European Union declined in 2025 for the first time in five years, driven by the arrival of lower-cost models as automakers respond to emissions regulations, according to an analysis by environmental think tank Transport & Environment (T&E).
T&E said the average price of battery-electric cars in the EU dropped by about €1,800, or roughly 4%, to €42,700 in 2025. The decline was largely attributed to the introduction of more affordable compact electric vehicles in the B-segment, where average prices fell by 13%.
Among the models contributing to the trend were the Citroën ë-C3 and the Renault 5, which manufacturers launched to comply with the EU’s CO₂ fleet emission targets for passenger cars. However, those targets were later softened by the European Commission, which decided to average compliance over the period between 2025 and 2027.
“Fleet emission standards are benefiting the climate and making a difference to consumers’ wallets,” said Sebastian Bock, managing director of T&E Germany. “Thanks to CO₂ targets, Europe finally has more affordable electric cars. If we stay the course and do not dilute the 2030 targets, new electric cars will soon be cheaper than internal combustion engine vehicles. This will help many Germans escape the fossil fuel trap they are once again feeling at the pump.”
Premium Models Drove Earlier Price Increases
The price decline in 2025 contrasts with the previous four years. Between 2020 and 2024, the average price of electric cars rose by roughly €5,000, according to T&E, as automakers focused on higher-margin premium and large vehicle segments.
Examples cited include models such as the Audi Q4 e-tron, Audi e-tron GT, Volkswagen ID.4, Volkswagen ID.5, Volkswagen ID.7, BMW iX, BMW i4, BMW i7, Mercedes-Benz EQE, Mercedes-Benz EQS, and the Porsche Taycan.
T&E said the emphasis on larger vehicles was possible because earlier CO₂ fleet standards were less stringent, reducing pressure on manufacturers to introduce mass-market electric cars.
Automakers are now preparing additional affordable models that could further reduce EV prices. Planned launches include smaller electric vehicles from the Volkswagen Group, such as the Volkswagen ID. Polo and Cupra Raval, as well as compact SUV derivatives like the Volkswagen ID. Cross and Skoda Epiq. Volkswagen has indicated the ID. Polo could start at around €25,000, with the other models expected to be priced slightly higher.
Price Parity With Combustion Cars Expected
T&E said electric vehicles in the D and E segments reached price parity with internal combustion engine cars in 2024. Smaller vehicles in the A, B, and C segments are expected to reach similar parity by 2030, provided manufacturers pass cost reductions on to consumers.
However, the think tank warned that this timeline could be delayed if emissions regulations are weakened.
T&E estimates that if the EU loosens its 2030 CO₂ fleet targets, the average price of an electric car could be about €2,300 higher in 2030 than it would be under the current framework. The organization argues that weaker targets could encourage manufacturers to prioritize larger, higher-margin electric vehicles instead of lower-cost mass-market models.
Policy Debate Could Shape EV Adoption
The organization also warned that further relaxation of the rules could slow EV adoption across the region.
According to T&E projections, averaging the 2030 emissions target over three years could reduce the share of electric cars in new EU registrations from 57% to 47% by 2030. A five-year averaging period, which some automakers have proposed, could reduce that share further to 32%.
“We must not delude ourselves into thinking we can sustainably protect our domestic industry by lowering standards,” Bock said. “If the CO₂ targets for 2030 are relaxed, it will only delay the impending price drop for electric cars and secure short-term margins and dividends at the expense of long-term viability.”
He added that competition from international manufacturers is increasing. “Meanwhile, international competitors are not standing still: Chinese manufacturers are already making significant inroads into the European market and are even overtaking our traditional premium brands in plug-in hybrids. Germany’s response must be technological excellence and a commitment to global leadership, not the dilution of targets.”